Exhibitions. Reed Exhibitions is buying the high-rated, UK-based Mack Brooks for a price believed to be some £200m. The privately-owned Brooks was established in 1965 and holds more than 30 business-to-business events in 14 countries, across airport technology, chemicals, packaging, and fasteners. The company, whose major brands include Euro Blech, InPrint, RailTex, FastenerFair, InterAirport and ChemSpec, has long been one of the UK’s most admired independent exhibition organisers. One flagship is the Fastener Fair, taking place at Stuttgart in March, which will have a total of 22,000 net sq m of exhibition space occupied by 900 companies from 40 countries. It is said to be almost 10% larger than the previous event in 2017. Owner Stephen Brooks has spent half a lifetime fending off bids from larger rivals. In 2016-17, Mack Brooks made operating profit of £16.7m on revenue of £38.5m (a 43% margin). It’s a solidly international business: some 92% of revenues come from outside the UK, with profitable operations in the US, China, Singapore, India, France, and Germany. Even its complementary publishing is soundly profitable. Mack Brooks is a gem of a business and there are several disappointed exhibitions bosses who had thought they were on some kind of a long-term promise whenever the owner decided to sell. But he could only sell to one of them. Reed actually pipped Inflexion private equity (former 47% owner of UK-based CloserStill) to the deal. The big news is certainly that the RELX parent decided to invest some £200m in an acquisition on behalf of Reed Exhibitions which – while very strong and growing – is strategically non-core in a listed global company which identifies itself as an information and data-tech group. No matter. It’s petty cash for the £32bn RELX and will, anyway, make the world’s second largest exhibitions group yet more attractive when/if the sale (which RELX executives have discussed) finally materialises. With its network of international offices, Reed will be able quickly to boost profits by saving much of the Brooks overheads. What’s more important is the price. The Mack Brooks strong portfolio of non-annual shows means that its operating profit has swung alternately in the last four years between £2m and £20m. Its complex corporate structure, international subsidiaries and joint ventures make tricky reading but, at one level, the profits of those four years have averaged £13m. So, the estimated £200m purchase price could be 16 x the average EBITDA. Not quite as steep as the price paid by Providence private equity for CloserStill. But imagine what these prices could mean for an eventual sale of Reed Exhibitions, with its £300m operating profit from 500 events in 30 countries. Do the maths.
News. Digital First Media, which is controlled by New York investment fund Alden Global Capital, is set to buy Gannett (publisher of USA Today and dozens of other newspapers including Arizona Republic) after making a hostile bid valuing the company at $1.4bn – a 23% premium to its share price last Friday. If successful, this would be the largest acquisition so far for Digital First Media (publisher of some 200 newspapers including the Denver Post). In its offer letter, revealing that it had bought a 7.5% stake in Gannett, Digital First accused the Gannett management of damaging the company with poor digital deal-making. The unwanted bid threatens to disrupt the auction for Gizmodo Media, where Gannett has been one of the few serious bidders. The Univision-owned Gizmodo has the eponymous tech website as well as the digitals Jezebel (gender, culture and politics) and Deadspin (sport). Gizmodo is thought most likely now to be bought by Bryan Goldberg, owner of Gawker (once part of Gawker Media alongside Gizmodo), Elite Daily and Bustle. Insiders sniped that Univision had been hoping to get a good price from Gannett rather than a typically price-squeezed deal from Goldberg. But what will happen to Newsquest Media, Gannett’s £130m-revenue/ £21m-profit UK subsidiary which has long been one of the country’s most successful regional newspaper groups? Its 165 news brands and 40 magazines have some 30m online users and 6m print readers, and employ 1,800 people. Will Digital First Media want to be in the UK or will the burgeoning Reach Plc (formerly Trinity Mirror), the UK’s largest national and regional news group, want – and be permitted – to acquire it?
Magazines. London-based tech consulting firm Panoply Holdings, which IPOd in 2018, has acquired the quarterly technology magazine and events brand D/SRUPTION which is said to “target at senior management involved in digital transformation”. It’s a slightly odd sounding transaction that involves an initial consideration of £50k in shares and an earn-out capped at – £3.6m. Neither D/SRUPTION (based in Leeds) which seems not to have been part of any registered UK company, nor Panoply have reported the transaction on their respective websites. The driving force behind Panoply is serial techie Neal Gandhi and the chair is Mark Smith, former finance director of UK-based marketing services companies Chime and Bell Pottinger.
B2B information. Habitat Magazine, a special-interest consumer and b2b publication on co-op/condo living and management, has purchased Vendome Real Estate Media. Both companies are New York-based and will now be known as The Habitat Group. Deal terms were not disclosed. The deal includes real estate legal newsletters, books and video. Habitat was founded in 1982 by Carol J. Ott and NY Apartment Law Insider, the oldest Vendome newsletter, was founded in 1979.
B2B information. New York-based Institutional Shareholder Services Inc. (ISS), “a provider of end-to-end responsible investment and governance solutions” to the global financial community, is acquiring Strategic Insight (formerly known as Asset International), of Maryland, a provider of data and research to investment firms for an undisclosed price. Both companies are owned by Genstar Capital private equity.
Special interest media. In a deal which underlines both the increasing value of specialist-enthusiast content and the fusion of online and broadcast media, the $13bn Discovery Inc has acquired control of the cycling digital Play Sports Group (PSG). The UK-based company produces over 1,000 online videos annually on YouTube. It gets 45m monthly video views, 3.1m subscribers and 5.7m social followers for eight online channels including Global Cycling Network (claimed to be the world’s largest and fastest-growing cycling channel), Global Mountain Bike Network, and the Global Triathlon Network. PSG says its “videos bring fans compelling daily content including expert tutorials, techniques, training, unparalleled behind the scenes event coverage, humour and entertainment. Presented by ex pro riders, GCN offers a uniquely qualified insight into the world of cycling, fuelling its viewers’ passion and knowledge”. YouTube’s European boss describes it as “a shining example of how to grow a passionate audience of fans using YouTube’s platform.” The fast-growing company employs some 140 people, including specialist marketing agency Shift Active Media, whose clients include many of the largest cycling brands. PSG has revenues of £15m and is thought to have been profitable in 2018 after making an EBITDA loss of £71k for the previous year. Revenues have multiplied three times in the past two years and are 80% from outside the UK. In 2018, PSG launched five new international channels, a consumer retail division and fan club, and broadcast live racing on its YouTube channels and via Facebook Watch. This month’s deal gives Discovery a 71% shareholding, following its initial acquisition of a 20% in 2017. The terms have not been disclosed but Discovery is believed to have paid some £5-6m for its initial 20% and an estimated £40-50m in this latest transaction which includes future options to buy the 29% still held by PSG founder Simon Wear. He will remain CEO of what is now a subsidiary of Discovery, and PSG looks a great fit. Discovery’s Eurosport claims to be Europe’s leading sport ‘destination’ and the primary TV rights holder for key cycling events, establishing an unrivalled portfolio which includes all three Grand Tours, more than 35 UCI World Tour races, including all five of the iconic Monuments, and the UCI World Championships. In 2019, cycling fans will be able to see over 200 days and 2,500 hours of live cycling on Eurosport. Its online site has an average of 42m monthly uniques. Discovery claims now to be the leader of an estimated $50bn global market. Life-long cycling enthusiast Wear launched PSG in 2012, two years after he had ended an 18-year career at magazines group Future Plc to start Shift Active Media. He was Chief Operating Officer of Future UK having also led the company’s dramatic growth in international licensing revenues. He secured highly-profitable deals with 56 partners in 39 countries to produce a peak global print audience of 25m for niche magazines as diverse as T3, Guitarist, PC Gamer, and Cycling Plus. Wear’s passion for specialist media seemed a perfect match for the magazine company founded 34 years ago by TED’s Chris Anderson in the picture-book city of Bath in England’s South West. Anderson, whose revered TedTalks became “Ideas Worth Spreading” in his next life, originally sloganised his hometown magazine business as “Media With Passion”. Future IPOd in the tech-investor boom of 1999 and quickly raced to a market cap of £1bn, followed abruptly by the first of a series of near-death sell-offs by fickle investors. There was often a lot more passion than profit. Future’s collective enthusiasm somehow carried it through successive crises in the two decades before it finally escaped from a UK-typical dependency on newsstand sales and print advertising. But the home-spun, try-anything publisher was a brilliant business school for Simon Wear, whose entrepreneurial instincts were ultimately spiked by 21st century magazine cutbacks by UK supermarkets and advertisers. By then, he had fallen in love with online video and “the limitless distribution and total meritocracy (the best content wins) of YouTube. I just had to work out how to do it.” Back in 2012, some observers assumed that Wear’s Bath-based launch of the Global Cycling Network (GCN) was actually coming down the road from Future whose cycling-magazine web sites (since divested to raise rehab cash) were then attracting over 5m monthly uniques. In 2012, Flashes & Flames said that GCN was an indication of how much “magazine publishers like Future will have to change in order to compete. Suddenly, the world’s leading cycling publisher finds itself on the outside lane in a key growth sector.” Six years later, the Play Sports Group is powerful fan and community -based media. The realisation that the future of so much media lies in “narrow-but-deep” content and relationships is nothing new. Indeed, for all the damaging loss of print advertising, the relatively steady audiences enjoyed by many specialist magazine brands underline the global promise of media produced by enthusiasts for enthusiasts. But they will have to work at it. Meanwhile, the mighty Discovery seeks to become “the premier real life entertainment company” with multi-platform assets around distinct programming niches, from cooking, home decorating and motoring to golf, cycling and other sports. The PSG acquisition follows announcement of Discovery’s Golf TV streaming service which launches this year with the PGA Tour and Tiger Woods. The whole strategy emphasises the unmistakeable TV-led threat of “media fusion” for magazine-centric companies: broadcast-streaming, text and interactive digital combining to offer the ultimate in consumer engagement and e-commerce. But specialist consumer publishers (and perhaps some B2B groups too) can also build multi-platform communities of fans and enthusiasts beyond the reach of the data monsters. Former Top Gear TV presenter Jeremy Clarkson’s DriveTribe online communities enjoyed a luxuriously over-funded launch (£12m burned in two years), and may now be close to securing the additional investment necessary to monetise a fast-growing global audience. But, with a small fraction of the investment and none of the fanfare, the energetic Simon Wear has shown publishers everywhere how to do it.
Exhibitions. CloserStill Media, the 10-year-old London-based organiser of exhibitions principally in the healthcare, learning technologies and medical sectors, has been acquired by Providence Equity Partners for £340m. The price, based on an estimated 2018 operating profit of some £15m, is a multiplier of perhaps 22 (and more than 8 x revenue), a new high in a season of soaring valuations for exhibitions. Equally striking is that it is just six years since CloserStill was valued at £25m by Phoenix Private Equity which was able to flip its investment to Inflexion in 2015 with the company then valued at £125m even though operating profit that year was just £1.2m. Revenue has multiplied almost five times in the past four years as CloserStill has built its flagship events including the London Vet Show, Cloud Expo Asia, Data Centre World, The Pharmacy Show, Learning Technologies, and The Dentistry Show. Since the Inflexion investment, the company has made eight acquisitions – five in 2017 and three in 2018 – but CloserStill founder and chair Phil Soar has stressed that the majority of the company’s growth has been organic, through the geo-cloning of successful shows in Asia, Germany and the US, with the launch of events such as Cloud Asia, Learning Technologies Germany and New York Vet. That’s how the company sustains its 30%+ EBITDA margins. Soar is an industry veteran whose successful back story includes managing the legendary Blenheim exhibitions and also magazine and part-work publishing companies. But he’s also managed a UK football club and has written books about sport. Soar and his management team are said to be staying in place at CloserStill and have promised shares to all their staff. The founder’s carousel-ride around private equity investors looks like a masterpiece of investment management. But it underlines the undimmed enthusiasm for exhibitions, still the only area of traditional media not disrupted by digital. While holdings of investments by private equity firms (in the US, for example) are said to be stretching beyond a traditional three years to more like 5 years, their involvement in exhibitions is helping to grow prices as the companies constantly seek to replenish portfolios. CloserStill buyer Providence, for example, previously owned Clarion Events (sold to Blackstone in 2017 ) and George Little Management (sold to Emerald in 2011). That’s why they’ve all been swarming round UK-based Mack Brooks where Reed Exhibitions is tipped to pay £250m for a great internationally-focused company but a tightly-managed one with 43% margins where the last profits were £16.7m. But nobody has missed the point that Reed Exhibitions itself – until last year, the long-time world exhibitions leader but which has consistently had lower profit margins than most of its peers – might seemingly command a sale price of up to £6bn (20 x 2018 operating profit). For parent company RELX, which is investing big in data-tech and is also now bracing itself for damaging attack on its heady profits from across academia, it’s surely only a matter of time before they cash in. Get ready.
Broadcast-streaming. The UK’s state-owned Channel 4 TV network has bought Bauer Media’s 50% share in The Box Plus Network, giving it full control of the TV music and entertainment business. The network operates TV channels such as 4Music, The Box, Box Upfront, Box Hits, Kiss, Magic and Kerrang and serves to bolster Channel 4’s portfolio. Deal terms were not disclosed.
B2B information. Ve Global, a British-founded data company with 380 employees, has acquired the Swedish e-commerce analytics platform Divvit in a deal that involves both cash and Ve’s stock. Ve has also “made a financial commitment” of some £500k to integrate Divvit’s solutions into its products, the company stated in a press release.
B2C digital. RTL Group is acquiring control of the UK-based video technology company Yospace. The transaction is expected to close in February. Yospace enables Server-Side Dynamic Ad Insertion (SSDAI) which allows the replacement of existing commercials from a broadcast stream with more targeted, personalised advertising. Yospace customers include BT Sport, TV4, ITV in the UK and Seven West Media, in Australia.
B2B information. The $2bn-revenue Autodesk Inc, of California, has agreed to acquire BuildingConnected for $275m net of cash acquired. This acquisition will add bid management, risk analysis and other pre-construction solutions to Autodesk’s construction portfolio. With BuildingConnected, the company gets a network of 700,000 construction-related professionals that help real estate companies and construction firms find qualified workers for their projects and manage the bidding process. Much like PlanGrid (acquired last year by Autodesk for $875m), which takes huge paper plan books and digitizes them for construction sites, BuildingConnected does that with the planning and management part of the construction process for which companies once used complex Excel spreadsheets.
B2B information. Lovell Minnick Partners, a US private equity firm specializing in financial business services companies, has acquired ATTOM Data Solutions, a leading provider of national real estate data and analytics from Renovo Capital and Rosewood Private Investments. Financial terms were not disclosed.
B2C digital. Dotdash, an operating business of IAC, has acquired Byrdie, a digital beauty brand, and MyDomaine, a women’s lifestyle property, from Clique Brands. Terms of the deal were not disclosed. Launched in 2013, Byrdie will become Dotdash’s platform brand for its expansion into the beauty space.
B2B information. Private equity-owned Adweek, of the US, has acquired CMO Moves LLC (doing business as ‘Marketer Moves’). Marketer Moves’ founder Nadine Dietz will join Adweek as editor, CMO Moves & Innovators. Deal terms were not disclosed. The 40-year-old Adweek has consistently been no.2 in the media-marketing-advertising news market to Crain Communications’ Advertising Age.
It’s that time of the year. Inevitably, this is a blend of deals that will (almost) definitely happen and those that might or should. See you in 2019.
Informa, now the world’s largest exhibitions group after acquiring UBM in 2018, divests its STM and B2B information companies
UK B2B Centaur Media MBO of its Marketing portfolio (Marketing Week, eConsultancy, Festival of Marketing, and OysterCatchers) after the planned sale of The Lawyer, Money Marketing and other ‘non core’ exhibitions and information services
UK-based but increasingly international information and events group AgriBriefing acquires the agrifood information of Reed Business Information and/or Informa
IPOs of acquisitive UK companies: AgriBriefing, Mark Allen Group , and Metropolis Group
Daily Mail Group sells its remaining 49% shareholding in Euromoney, the £1.2bn company it founded in 1969
Michael Bloomberg decides to run for US President and sells his eponymous data-tech business to Hearst which became 100% owner of the Fitch Group in 2018
Mail Online and BuzzFeed introduce paywalls in a bid to achieve long-promised profitability
Jeff Bezos (Washington Post) acquires UK’s privately-owned Daily Telegraph
News Corp launches worldwide news streaming service
News Corp acquires Australian Financial Review from Sydney-based Nine Entertainment Co which recently acquired the daily as part of Fairfax Media
New York Times launches ‘pick-and-mix’ digital content subscriptions, as a sequel to its success in building subscriptions for individual ‘strands’ including the Daily Crossword (350k subs) and Cooking (120k)
The Blackstone-owned Clarion Events acquires the largest US-owned group Emerald Expositions
RELX sells the £1bn-revenue Reed Exhibitions, until this year the world leader
Daily Mail Group acquires Britain’s £450m ITE Group
Hearst and Conde Nast (long-time family-owned rivals but collaborators in shared circulation and production services) agree to merge their worldwide magazines groups
News Corp Australia ‘merges’ with SevenWest (Channel Seven, Pacific Magazines) to create a multi-media rival to Nine Entertainment Co (which acquired Fairfax Media)
English Premier League announces a plan for direct-to-consumer streaming of its top-rated football
Daily Mail TV extends its daily programme from the US to the UK and Australia
Axel Springer’s newly-profitable Business Insider launches global ‘business TV’ streaming service
B2B information. The UK-based TES Global teachers information business (formerly the Times Educational Supplement) has been sold by TPG to Providence Equity Partners for a price believed to be some £250-300m. With 11.6m registered online users, TES connects teachers and schools, with around 500k teachers clicking to apply for jobs last year. The believed reduction in price from the £400m paid by TPG in 2013 reflects the decision to de-merge the Times Higher Education Supplement (THS) and its World University Rankings – but also the flatlining of TES Global which made 2017 EBITDA of £33.6m on £75.5m revenue. This is the fourth time TES has changed hands in the 13 years since it was sold by News Corp to Exponent private equity for £235m. Exponent (something of a media specialist in the UK market) flipped it two years later to Charterhouse for a rumoured £250m, but not before increasing profits by 50%. But that was the high-point for the recruitment classifieds which had long buoyed TES. Six long years later, Charterhouse sold a much-more-digital and global TES for £400m to TPG, which is thought unlikely to to recoup what it had paid, even after selling THS early in 2019 for an expected £100m. The Times Education Supplement was launched in 1910 as a free insertion in the Times newspaper. It became a standalone weekly in 1914. TES’s growing library of CPD content for teachers is claimed to be the largest in the English-speaking world.
B2B information. Planet, the US aerospace and data analytics company that operates the world’s largest commercial fleet of satellites, collecting daily, high resolution imagery of everywhere on earth, is acquiring Boundless Spatial, Inc., a St. Louis-based geospatial software solutions company. The deal expands Planet’s commercial business with the US government and commercial agriculture clients. Transaction terms not disclosed.
Magazines. London-based Immediate Media has won the lucrative contract to publish Disney children’s magazines which, it is believed, will add some £12m (5%) to its revenues in 2019. The UK contract was formerly held by the £50m-revenue UK subsidiary of the Danish-owned Egmont group which first published Disney magazines in Scandinavia all of 70 years ago. The coup highlights the continuing growth of Immediate which is the UK’s most profitable magazine publisher and the market leader in TV listings, children & parenting, and food – and perhaps also in other sectors including crafts and cycling. It is almost 12 months since Hubert Burda Media acquired Immediate from Exponent for £270m (5-6 x EBITDA) during a year when 50% of all UK magazine publishing has changed hands. Burda’s price for Immediate was more than double the £121m that the private equity firm had paid the BBC seven years before. That’s not how it’s meant to be. But Immediate is the magazine publisher that grows profits, increases margins and circulations, and launches new monthlies. Three months ago, it paid an estimated £30m to acquire the £25m-revenue BBC Good Food, which has the biggest cross-media reach of any UK magazine brand, with 22m monthly uniques, 1.3m magazine readers, and 250,000 exhibition visitors. But there is something you should know. Immediate’s 95-year-old Radio Times (the world’s first broadcast listings magazine) may account for some 50% of the company’s profit and is much more resilient than you would ever guess. For years, it accounted for almost 100% of the profits of the former BBC Magazines. Even now, when printed listings have no right to exist, Radio Times is the UK’s third most popular paid-for magazine – and the most profitable. Its average weekly sales in the first half of 2018 were 577k, a relatively modest 24% decline in the past four years. And profits have been sustained by a cover price that has increased from £1.80 to £2.80 in that time. Even in a UK magazine market still so dependant on newsstand sales, a full 45% of the Radio Times circulation is from posted subscriptions (another pattern right across the Immediate business which has a total of 1.1m subs). But, even that is only part of the surprising story. This month’s Christmas “double” edition of the indestructible Radio Times is expected to sell almost 2m copies at the “special” price of £4.90. It’s a decades-long tradition. So, for all the growth in digital (and Radio Times is no slouch there either), one of Britain’s best-loved magazines is the ultimate cash cow that has funded Immediate’s reinvention – and produced the UK industry’s best profit margins. The truth, of course, is that Radio Times is a high-quality magazine for an increasingly attractive older demographic and is much more than listings. That’s why it has been able to maintain a large audience and develop successful e-commerce in travel, books, gardening and financial services. The profits have funded investments including, for example, in the TV channels The Sewing Quarter and JewelleryMaker whose revenues last year increased by 28%. For a company that continues to deliver strong year-by-year results and has just emerged from private equity ownership, Immediate has a surprisingly settled long-term focus. With eyes on the future, it has recruited senior executives from Amazon, Sainsbury and the Ideal Home TV shopping channel, after previously hiring from Tesco and eBay. In a traditional media market of endless redundancies, Immediate is a genuine growth business and a steady employer of some of the UK’s top media talent. It’s a magazine-centric company with a never-ending stream of positive news and, now, the deal which gives Immediate an unrivalled set of children’s media licenses with the BBC, LEGO and Disney. For Burda, the acquisition of Immediate this year almost doubled its international business to some 40% of revenue and the UK is now its largest market outside Germany. In addition to Radio Times, Immediate has some 50 brands in the specialist magazines sweet spot. Its key brand include: Gardens Illustrated, Cycling Plus, MountainBike UK, Triathlon, Cross Stitcher Gold, Olive, Lonely Planet Traveller, and BBC titles Top Gear, Gardeners’ World, History, Good Food, and CBeebies. CEO Tom Bureau (as much tech as traditional media) is an under-stated but unmistakeable media industry star. But lesser rivals can be heard to snipe at the way Radio Times has bankrolled his company. They are missing the point. Immediate has a robust strategy for its “high-value special interest markets”. Its motivated team is bubbling with ideas, the company is spending £4m a year on R&D, and still manages to be more profitable than its larger peers. Immediate’s almost as good with data as print, and has cracked the major challenge for so many traditional groups: how to create ‘new’ media in existing markets without subordinating it to long-established print brands. While Radio Times (and other print magazines) still dominate the financials, hundreds of Immediate people are focused solely on digital media, e-commerce and events, and the success of digital projects like the wedding app Hitched and MadeForMums shows the strategy is working. Although it is very much a work in progress (and we might expect some bigger acquisitions to accelerate the growth in retailing and events), this is not the beleagured magazine market. Nor is Immediate’s parent company. In 110 years, the privately-owned Burda has grown into one of Europe’s largest and steadiest lifestyle media groups. Its real rise to prominence began in 1949 with the launch of Burda Moden, now called Burda Style, a sewing pattern magazine published in 15 languages. The Munich-based Burda now has one of the world’s largest databases of digital sewing patterns. The company is increasingly international. Across 20 countries, the €2.7bn-revenue Burda publishes more than 300 magazines, including the newsweekly Focus, celebrity magazine Bunte, and local editions of Elle, InStyle and Playboy. For the past 20 years, Burda has been funding digital startups and investments include: Etsy, Baublebar, Vinted, M.Gemi, Nebenan.de, NotOnTheHighstreet and Zilingo. Owner Hubert Burda multiplied his inheritance during 25 years running the company. In 2010, he handed over day-to-day control to its first non-family CEO, former McKinsey consultant Paul-Bernhard Kallen who has presided over undisrupted growth. London insiders contrast his trusting, hands-off Burda management style with the micro-focus of Hamburg-based Bauer (which itself had once tried to buy the former BBC Magazines). The numbers tell the story of Burda, as a company which doesn’t meddle in the management of subsidiaries: it has almost 12,000 employers in 20 countries but a headquarters team of only 30. It’s working.
Exhibitions. Reed Exhibitions has formed a new joint venture company, Reed Exhibitions Hengjin, with Shanghai Forever Exhibition. The company will manage the Automotive Manufacturing Technology & Material Show, China’s leading automotive engineering trade show, as well as the co-located Assembly & Handling Technology Exhibition. In 2018, the two events together were 100,000 gross sq m and hosted more than 77,000 professional trade visitors, exceeding 2017 visitors by 12%. Reed Exhibitions Hengjin will also organise a series of related conferences and seminars across China throughout the year. Michael Cheng, President of Reed Exhibitions China said: “The automotive manufacturing industry is a core pillar of China’s economy, contributing 11% of China’s total GDP. This new venture enables Reed Exhibitions to expand further and establish a strong foothold in this market.” The next edition of the annual event will be held 3-6 July 2019 at the Shanghai New International Expo Centre.
MidOcean Partners is acquiring and merging Hanley Wood, the B2B information services company serving the US residential construction industry, and Meyers Research, the provider of real-time market data to the homebuilding industry, which was previously a subsidiary of global real estate investment company Kennedy Wilson. Through Metrostudy and Zonda – the respective data products of Hanley Wood and Meyers Research – the combined company will offer data spanning the full homebuilding lifecycle, from land acquisition and property development and build, to new home sales and marketing.
Exhibitions. Messe Frankfurt Exhibitions has acquired the biennial Clean Show which it will organise with five former sponsors. The 2017 show was held in Las Vegas and had 11,000 visitors and 481 exhibitors. The 2019 show will be held 20-23 June in New Orleans. Future events are planned for Atlanta and Orlando in 2021 and 2023 respectively. Messe Frankfurt will organise the Clean Show in cooperation with the former owners, five US trade associations that include Drycleaning & Laundry Institute, TRSA, the Association for Linen, Uniform and Facility Services, Coin Laundry Association, Association for Linen Management, and Textile Care Allied Trades Association.
Music. Apple has purchased Platoon, a company that helps independent artists fund, distribute and market their content using analytics to source talent, and figure out the best way to target and market content. London-based Platoon was founded in 2016 and has 12 full time employees. Transaction terms were not disclosed. TechCrunch’s comment ahead of the the deal is interesting: “Spotify has made some significant moves to by-pass record labels and work directly with artists, and there are signs that Apple could be eyeing up a similar approach to get a bigger share of original content.”
B2B information. Vista Equity Partners is acquiring 7Park Data, a software and data analytics provider to institutional investment firms. Financial terms were not disclosed. The New York-based company uses machine learning and predictive models to transform unstructured information into performance indicators. 7Park says the 150 firms it works with worldwide include sophisticated investment houses and Fortune 500 companies, who depend on its software for benchmarking, forecasting and product development.
B2B information. Experian is acquiring African credit bureau Compuscan for $263m. Founded in 1994, Compuscan is a leading provider of credit information holding records on 26m people and 200,000 businesses in South Africa. It will deliver $35m revenue in 2018.
B2B information. Founded in Toronto in 2012, Quandl is used by 8 of the top 10 hedge funds. It provides alternative and core financial data from over 350 sources to more than 30,000 active users. Transaction terms not disclosed. Quandl provides alternative data and core financial data from over 350 sources to more than 30,000 active monthly users. The company offers a global database of alternative, financial and public data, including information on capital markets, energy, shipping, healthcare, education, demography, economics and society. Nasdaq plans to combine Quandl with its existing Analytics Hub business within Global Information Services.
Classifieds. Apax private equity is acquiring the New Zealand online market place Trade Me for NZ$1.75bn. Trade Me is a public company launched in 1999 and now has more than 600 employees. Apax won a bidding war with Hellman & Friedman. Trade Me was founded by Sam Morgan who sold it to Fairfax Media in 2006 for NZ$700m. The Australian publisher, in turn, floated Trade Me in late 2011 at a valuation of NZ$1.07bn. Trade Me is an attractive target because it is a leader in the New Zealand online classified market for automotive, jobs and real estate, and Morgan Stanley sees plenty of upside for future investors: “We estimate that, in New Zealand, only 60% of ad dollars will be online in 2019, versus a more mature Australian market at 90%. This underpins Trade Me’s earnings growth trajectory.”
B2B information. The UK-listed Euromoney Institutional Investor plc (Euromoney) is buying The Deal (an M&A database) and BoardEx (profiles of business leaders) from TheStreet Inc in a transaction which highlights the divergent fortunes of two financial media groups. On the one hand, the cashed-up, increasingly US-focused Euromoney is paying $87.3m for two subscriptions businesses that cost TheStreet just $28m in recent years. On the other, TheStreet is selling assets whose $25.2m revenue is some 50% of the whole company. And, while Euromoney’s own broker may be exaggerating its expected 25% profit margins (leading them to declare the price of 12 x EBITDA), the acquired B2B businesses still might account for most of TheStreet’s profit. Which just shows you what has happened to the 22-year-old New York company whose value peaked at $1.7bn in 2014 and is now below $80m. The company was founded by Jim Cramer, journalist turned hedge fund manager and celebrated TV host (CNBC’s Mad Money), and Martin Peretz, publisher of The New Republic. The sale to Euromoney follows TheStreet’s divestment of RateWatch to S&P Global for $33.5m. Those deals, heavy staffing cuts and new paywalls have been the back-to-profit highlights of the three-year reign of former USA Today editor-in-chief Dave Callaway. The newspaper veteran is now expected to quit as CEO of TheStreet after pointedly saying the board had decided to make this latest sell-off. For the once-sprawling Euromoney, which generates some £110m of EBITDA at a 25%+ margin, it is the largest acquisition of a post clear-out spree by CEO Andrew Rashbass (ex Reuters and The Economist). Whisper it softly but the three years since his appointment have changed plenty of soft things in a company once known as much for a somewhat bullying culture as for brands like Institutional Investor, BCA Research, Metal Bulletin, Insurance Insider, and Euromoney itself. More visibly, the Euromoney revolution started with the 2016 sell-down of what had been parent company DMGT’s majority stake. Then came this year’s disposal of the low-margin Hong Kong-based Global Markets division for $180m, followed by the $20m acquisition of Random Lengths, a Price Reporting Agency for the global wood products industry. Many investors expect more PRA deals and, in that sense, the acquisition of The Deal and BoardEx was unexpected. But the £1.4bn Euromoney also likes subscriptions (almost 60% of current revenues) and events. That’s why it’s expected to bid for Centaur Media‘s The Lawyer. Even at the highest price touted (£40m), The Lawyer would only take 50% of Euromoney’s net cash. It could be one way for the rejuvenated UK company to celebrate its 50th anniversary in 2019. But there will be plenty of others.
B2C digital. CarGurus, the Nasdaq company which claims to be the largest online car vendor in the US and also the fastest-growing in the UK (where it’s still tiny), is buying PistonHeads from Haymarket Media Group for a price believed to be £12-15m. The perfectly-branded online platform was launched in 1999 and acquired by Haymarket for almost £3m eight years later. Over the past 11 years, PistonHeads’ distinctive editorial tone and and busy used car marketplace have helped to multiply its audience from 900k to a steady 4m monthly uniques. It is believed to have consistently generated EBITDA of some £1m at a 40% margin. While it has become the quintessential online community, it has never been able to compete directly with the £300m-revenue AutoTrader as must once have been envisaged. The sale underlines the privately-owned Haymarket’s transformation into a largely B2B information, content marketing and events company (where it all began more than 60 years ago) focused primarily on well-established media and events in the marketing-communications and medical sectors. Its key brands include: Campaign, Media Week, PR Week, GP, Medeconomics, Mims, and Management Today. The £100m-revenue Haymarket built its reputation by giving B2B magazines (like the legendary 50-year-old Campaign) the design and content values of the sharpest consumer media. It was a pioneer too in the highly-profitable awards ceremonies that now crowd every B2B market. It’s always been great at events. Although Haymarket retains some consumer brands (notably WhatCar?) it has sold most of them to: Future (including What Hi? and FourFourTwo); Kelsey Media (Stuff); and Autosport Media (Motoring News, Motorsport, Autosport, and F1). The company’s strategic slim-down followed the £80m windfall sale of its Thames riverside film studios which substantially paid-off its long-term debt. The sale of PistonHeads, similarly, to a hungry buyer (presumably prepared to pay some 13-15 x EBITDA) could not be passed up. It’s somebody else’s turn to have a go at the UK’s mighty AutoTrader. CarGurus has been hunting in the UK for the past year and is believed to have bought PistonHeads on the rebound from losing out to Ebay in the October sale of the more mainstream Motors.co.uk. It remains to be seen whether the definitively non-mainstream PistonHeads really can help CarGurus (anymore than it did Haymarket) to conquer the non-enthusiast market in the UK. The mass market generally seeks relief from the pain of buying a car while PistonHeads’ disciples wallow in the pleasure of it all. CarGurus was launched in 2006 by Langley Steinert, the under-the-radar co-founder of TripAdvisor. He says the idea was to create the “TripAdvisor of cars”, a site where people could read reviews from other users about their experience with their cars: “So we allowed user reviews, and we actually had a wiki model where people could edit articles about certain cars. And, at the end of it all, it didn’t work. I mean, we had some traffic, not a lot of traffic. We weren’t generating much revenue, and we certainly weren’t gonna be able to build anything of any substance. So I think we were about a year and a half into it, and I huddled with the six developers we had at that point and said, ‘Guys, this isn’t working. We’ve gotta try something else.’ ” Plan B was the site’s re-engineering with proprietary technology, search algorithms and data analytics “to bring trust and transparency to the automotive search experience and help users find great deals from top-rated dealers”. The re-vamped site sought to answer some fundamental consumer questions: Which dealer has a car like this? What is a fair price for this particular type of car? Have others had a good experience buying from this dealer? Used cars are assigned one of five Deal Ratings: Great Deal, Good Deal, Fair Deal, High Priced, or Overpriced. It worked. The 2017 revenue was $316.9m (60% up on the previous year) with EBITDA of $24.1m. Steinert notes that, both at TripAdvisor and CarGurus, a deliberately low cost-base enabled him to keep the ‘burn rate’ under control and, therefore, helped him to switch strategies after early disappointment. That might just be a lesson for another motoring-media digital business. Enter DriveTribe, a much-hyped motoring site which two years ago looked like The Next Big Thing for car nuts everywhere. It was launched two years ago by Jeremy Clarkson, the punchy former host of the BBC’s world-conquering Top Gear TV programme and the team which now fronts Amazon Prime’s Grand Tour. DriveTribe’s CEO Jonathan Morris, fresh from fin-tech startups, described the commercial model as embracing content creation, distribution, and data insights. Well, some were impressed. 21st Century Fox and Bayer invested $12m (£9.4m) in the platform, alongside millions from Clarkson and his Grand Tour team. The TV presenter described DriveTribe as “YouPorn about cars”. His on-screen colleague Richard Hammond has said: “Gamers have got Twitch, travellers have got TripAdvisor and fashion fans have got, oh, something or other too. But people who are into cars have got nowhere. There’s no grand-scale online motoring community where people can meet and share video, comments, information and opinion. DriveTribe will change that. And then some.” Big ideas, and the site today has thousands of different ‘Tribes’ which group together content or conversations on specific topics. Sounds like the kind of powerful community engagement that the PistonHeads team would recognise, even if they never had Clarkson’s budgets. But that’s where the good news ends. In 2017, DriveTribe’s scored pre-tax losses of £8.3m after losing £4.2m in the previous year: more than £12m burned in just two years. The statutory accounts show it generated nil revenue in its first two years. Zilch. Just to complete the picture, staffing costs and headcount increased by 80% in the second year. The company could assert it was a ‘going concern’ because its balance sheet was stuffed with £6m of cash, courtesy of its star-struck investors but that will soon be gone. The air is thick with stories of rich advertising deals for Audi and Renault, and millions of users are said to be posting to it, taking part in live chats with other tribe members, sharing ideas, videos and experiences or playing online quizzes. Millions more are said to be consuming DriveTribe content on social media. But there are plenty of doubters: one online journalist noted in August that “the site’s monthly traffic seems to have been so minimal that it hasn’t appeared on ComScore at all so far in 2018, and the few months it was there in 2017, it was under 100,000 monthly uniques in the US”. In 2018, DriveTribe’s third year has been marked – hooray – by its first revenue. But the alarm bells are ringing, and the media-star founders are in London searching for new investors or even a trade buyer that can be as impressed as the original funders. Phew.
Broadcast. In the US, Nexstar Media Group has agreed to buy Tribune’s 42 television stations and cable network in an all-cash deal. The merger will form the nation’s largest TV station company. If approved, the combined company will own more than 200 TV stations and cover 39% of US households. Nexstar will now gain a foothold in major markets, including New York, Los Angeles and Chicago for the first time, plus a cable channel (WGN America) and a 31% stake in Scripps’ The Food Network.
Exhibitions. The UK subsidiary of the US-owned Diversified Communications has acquired Digital Construction Week, claimed to be the UK’s leading trade show dedicated to digital construction, engineering, design, manufacturing, and operation. DCW was launched in 2015. In October, it attracted a claimed 6,500 visitors and 200 exhibitors. Transaction terms not disclosed. Diversified is a B2B media and events company based in Portland, Maine and formerly operated local television stations.
Books. Lerner Publishing Group, of Minneapolis, has acquired the 12-year-old privately-owned Zest Books, which publishes young adult non-fiction books on entertainment, history, science, health, fashion, and lifestyle advice. Zest Books will become Lerner’s 13th imprint. Lerner, founded in 1959, is one of the largest independently-owned children’s book publishers in the US, releases 450 titles each year and has 5,000 titles in print.
Broadcast. Cogeco Media, which owns and operates 23 radio stations across Quebec and Ontario, has reached an agreement to buy 10 of RNC Media’s 15 radio stations in the two states for $18.5m.
B2B information. Nasdaq-quoted Marchex, Inc, a provider of call analytics that drive, measure, and convert callers into customers, has acquired Callcap, a call monitoring and analytics company, for total consideration of $35m in a combination of cash and stock.
Publishing. Kingfisher Media, a Gateshead, UK-based publishing company that produces some 70 visitor guides to cities and regions across the UK and Ireland has been acquired in a management buyout. The company was founded in 2007 by former journalist Colin Cameron, who has now sold his majority shareholding to co-director Ian Heads for an undisclosed “seven-figure” sum.
Exhibitions. The UK-based Nineteen Group has acquired Western Business Exhibitions’ 10 events, including The Fire Safety Event, The Security Event, The Health & Safety Event, and seven trade publications. The deal coincides with investment from Phoenix private equity. Nineteen, whose founder is majority shareholder Peter Luckham-Jones, is thought to have revenue of £3-4m. Phoenix’s only previous foray into exhibitions is believed to be an early investment in CloserStill back in 2012.
B2B information. Everybody in UK media likes Centaur: employees, journalists and even long-suffering investors who have stuck with its under-performing shares for a decade and more. The £70m-revenue UK company has been a prominent part of B2B since the 1978 launch of Marketing Week by founder Graham Sherren. But now it’s preparing for a January sale. An October profit warning came with an investor-soothing decision to sell-off almost half of its business and stick only with the marketing services division. The company has appointed Livingstone (which recently clinched the £166m sell-off of Dennis Publishing) to handle the sale of The Lawyer. Cavendish (part of Oaklins worldwide) will advise on the potential sale of Centaur’s exhibitions (including the Business Travel Show, The Meetings Show, SubCon, and Employee Benefits) and its financial brands Money Marketing, Mortgage Strategy, Platforum, Taxbriefs and Headline Money. It will be a lively auction. The Lawyer, which has revenue of some £8m, potential profit of £2-3m and has increased its digital income five times in three years, may attract bids of £30-40m. Inflexion private equity may be the first in line. It is the owner of legal publisher Chambers whose CEO Mark Wyatt is a former publisher of The Lawyer. Wyatt also founded Legal Week which is now published by ALM/ American Lawyer. The US publisher is owned by Wasserstein which may also be interested in acquiring The Lawyer. They would join other bidders including News Corp’s The Times (which is already involved in UK legal publishing), the Financial Times, ThomsonReuters, and Bloomberg, most of which will also be interested in the financial portfolio. And, of course, the massed ranks of cashed-up private equity will be all over the auction. Centaur’s six exhibitions have £12m revenue (25% up in four years) and are being marketed at a time of high activity in tradeshows. (In France, the sale of the 10-year-old Paris-based Comexposium – one of the world’s top five – may be underway. In the UK, Inflexion is selling its minority stake in the 10-year-old CloserStill whose £55m revenue, 50% EBITDA margins, and prodigious growth rates will attract some rich offers. Private equity bidders are favourites for both). Centaur Media’s big sale may have unintended consequences for CEO Andria Vidler and her team. Pushy shareholders are well aware that selling almost half of Centaur’s business (for what may prove to equal the market cap of the whole company), will be payday but will leave them with a distinctly sub-scale listed media company. That is why we should expect at least some rivals (invited or not) to bid for the business that Centaur theoretically expects to retain. The hot tip must be the increasingly international Ascential Plc whose Cannes Lions, MediaLink, and WARC data businesses would complement Centaur’s Marketing Week, Festival of Marketing, Creative Review, Celebrity Intelligence, Oystercatchers, and eConsultancy. There’s Centaur consulting synergy with Ascential’s WGSN’s trends information business and the World Retail Congress and Retail Week. The combination would create a world of data and events possibilities for the impressively growing £1.6bn Ascential. Those – and the obvious options for expanding The Lawyer into the countries that share a British-based legal system – emphasise the unfulfilled promise of Centaur Media. While the 40-year-old company has made good digital acquisitions, built strong audiences and subscription information services, and cut costs, its sprawling portfolio (and print-dragged lacklustre revenue) has been largely confined to the UK. The publisher, whose heyday was characterised by highly-successful low-cost launches of weekly B2B magazines stuffed with jobs advertising, has struggled to find new growth. Its 2004 IPO valued the company at £148m, more than double its current market cap. But, in the intervening 14 years, it has simply lacked the firepower to fulfil its promise and having three Chairs in the past three years will not have helped. Perhaps a much-discussed plan to merge with advertising intelligence company Ebiquity (now itself under pressure) could still work. A long speculated merger with Wilmington Group now seems unlikely. But even Centaur’s success in selling its Homebuilding consumer magazines and exhibitions to Future Plc for £32m – 8x EBITDA – inevitably diluted profits. Paying off low-cost debt is a mixed blessing for any listed company and is usually the tell-tale sign of nowhere to go. Focusing now on the marketing sector may just give Centaur the chance to dream of becoming a global information provider – but probably only if it can find a transformational deal. If it’s not too late.
Business information. The Reed Business Information (RBI) division of the £32bn RELX Group is selling its Netherlands agricultural business media to a company being formed (curiously) by three prominent Dutch publishers. RELX will retain a minority share in the new company, Misset, founded by Derk Haank (ex CEO of Elsevier and Springer Nature), Cor Jan Willig (current CEO of specialist magazine publisher New Skool Media) and Luc van Os (current CEO of Hearst in the Netherlands). The Boerderij farming publishing, information and events company has revenues of almost €30m and 140 employees. It’s a small deal for RELX but poses obvious questions about the rest of RBI’s Proagrica farming-food interests which include Farmers Weekly and Farmplan software in the UK. (Incidentally, the Dutch deal also comes at a time when Informa is believed to be selling its AgriBusiness information services.) But it also reflects RELX’s increasing emphasis on its US-based Risk & Business Analytics (RBA) whose Lexis sophisticated systems help banks to spot money launderers and insurance companies to weed out fraudulent claims. RBA claims to have saved the state of Florida more than $60m a year by preventing benefit fraud. The company’s strategy is to : Evaluate and mitigate risk; prevent fraud and cybercrime; and enable commerce. Pumped up by a billion dollars of acquisitions, it’s worlds away from UK-based brands like Flightglobal, Farmers Weekly and Estates Gazette which, for all the digital systems and successful consulting businesses, are linked to a hazy past when the sprawling Reed International, incredibly, straddled print, paper, publishing and paint. It had become the world’s largest publisher of consumer, business and specialist magazines and scientific journals. Then came the wholesale sell-offs of manufacturing and consumer publishing, and an initially bumpy merger with STM publisher Elsevier. Only the name Reed Business Information connects the company to distant days when the profits of B2B weeklies were turbocharged by jobs advertising. But RBI’s current numbers tell the story of a company whose 2017 revenue of £278m was static with operating margins which fell from 20% to 15%, with sharp rises in people costs. The results are stodgy even if they do represent a complete transformation over the past 10 years from print to digital. But RBI is only some 15% of RBA. The US-based RBA accounts for some 25% of RELX revenues and 35% of the profits. With underlying growth of 8%, it’s fast becoming the star business. Its revenues are 95% electronic, 80% from North America, and 63% from digital subscriptions. Just 2% of the revenue is from advertising, 3% from print and 15% comes from Europe but those less-desirables are almost wholly accounted for by RBI. It’s the same kind of detachment felt by the executives of Reed Exhibitions which is the smallest division of RELX whose self-description as a “global provider of information and analytics” seems to ignore its very existence. These may be among the signs that these two well-managed businesses will sometime be sold-off. In their different ways, they represent a distraction from the brilliant RELX group which has increased revenue and operating profit by 21% and 47% in the eight years since former Elsevier science boss Erik Engstrom became CEO. That was the year also that Reed lifer Mark Kelsey, now head of RBA, became CEO of RBI and accelerated its transformation from print to data. Now, Kelsey’s RBA is fast becoming RELX’s best-performing business – even before renewed legal and industry attacks on the parent company’s egregious profits from scientific publishing. Corporate strategies are often conducted in plain sight and RELX people talk long and loud about science, risk, banking, insurance, and legal; not much about business information or exhibitions. While some of the RBI databases in business sectors have a broader relevance to the RBA strategy, divestment of much of the single-sector business information would enhance overall performance. So we can guess what’s coming as RELX completes its journey from media company to data-tech. It’s succeeding through robust global strategies, high-quality management and long-term investment. It’s become a smart and surprising contrast with longtime peer Pearson Plc whose market cap is now less than 25% of RELX. Reed Exhibitions (which accounts for 15% of RELX revenue) may be first on the block simply because of the sheer demand for exhibitions that is pushing prices towards 20 x EBITDA. But, perhaps, the other remnant of the Reed International publishing past will not be too far behind. The fact that RBI and Reed Exhibitions are strong successful businesses almost creates the incentive to cash in. For RELX, it’s all about focus.
B2B information. Clarion, the London-based tradeshow operator (owned by Blackstone private equity) that acquired PennWell in April for $300m, is rumoured to be considering (or already is engaged in) a process to sell PennWell’s non-exhibitions assets. The 110-year-old PennWell, based in Tulsa, Oklahoma, produces 150 print and online magazines, plus newsletters and an extensive array of websites, research products, digital media, and database services. It serves several sectors, including energy, fire and emergency services, dental and industrial technology, among others. It is 18 months since Blackstone private equity paid £600m for Clarion. Earlier this year, the company completed a “merger” with the Hong Kong-based Global Sources which operates eight semi-annual export-oriented sourcing exhibitions in Hong Kong, including what are reputedly the world’s largest electronics and mobile electronics shows, as well as an annual machinery show in China. The enlarged company was said to have £300m revenue with 200 exhibitions, principally across Asia, Europe and North America. It is managed from London under the Clarion name but uses the Global Sources brand in Asia. During the first six months of 2018, Clarion revenue increased by 5% with strong growth from the Gaming, Enthusiast and Technology sectors, the Global Sources shows and PennWell. The Blackstone ownership and continuing deals in events and venues (including the UK’s NEC complex) prompts Clarion links with the range of exhibition companies that may (or may not) be sold including: Reed Exhibitions, Comexposium, and CloserStill. In the US, it should be assumed that Clarion/Blackstone are glued to the country’s largest (and wholly domestic) exhibitions group, the listed Emerald Expositions. During the past month, it reported a fall in Quarter 3 profit and margins, and the sudden “resignation” of its CEO, after 35 years with the company. The share price has lost 22% in the past month and 40% since its 2017 IPO. Emerald, which was touted for pre-IPO sale at $2bn, now has a market value of just $840m. It operates more than 55 trade shows accounting for some 6.9m net sq ft. What are they waiting for?
News. Debt-laden UK regional publisher Johnston Press (JP) is under new ownership after its bondholders agreed to wipe out £135m of the company’s debts in return for control of the business. A newly-formed company, JPIMedia, has taken charge of the 251-year-old publisher in a “pre-packaged” sale after it was briefly placed in administration. The owners comprise the bondholders, who were previously owed a total of £220m by JP, and are headed by US-based hedge fund Golden Tree Asset Management. They have agreed to wipe out £135m of the debt, extend the repayment period for the remaining £85m to 2023, and inject a further £35m of new money into the business. David King, formerly chief executive of Johnston Press, becomes CEO of JPIMedia and will continue to lead the business. The future now probably depends on: whether the cash-generative company can sell its profitable i tabloid for a decent price (the Daily Mail group is said to want it, perhaps for some kind of partial merger with its wobbly Metro free daily); and if/when JPIM can halt the decline in advertising revenue.
B2B information. North Carolina based Progressive Business Media is being acquired by Minneapolis based BridgeTower Media. Financial terms were not disclosed. PBM was formed by CEO Matthew Slaine and includes a roll up of home furnishings and gift trade media brands and related sub-brands, including: Furniture Today, Home Accents Today, Designers Today, Casual Living, Exterior Design, Gifts and Decorative Accessories, HFN, and Home Textiles Today.
Books. French group Vivendi has agreed to buy Editis, France’s second largest book publisher, from Grupo Planeta of Spain for €900m. The deal is subject to French Competition Authority approval. In the UK, The Bookseller commented: “The takeover sounds like history repeating itself, since the Vivendi group—under different ownership—controlled what became Editis before the foundations of the present group were laid in 2004. It is now made up of more than 50 publishing houses including Robert Laffont, Nathan, Bordas, Plon, Perrin, Pocket and Belfond. Leading authors include Marc Lévy, France’s bestselling novelist worldwide.”
B2B information. Mercer, a wholly-owned subsidiary of Marsh & McLennan insurance Companies, has acquired Summit Strategies Group for an undisclosed sum. Summit has 150 researchers and the deal enhances Mercer’s leading position in investment consulting for not-for-profit, pensions, alternatives and OCIO markets.
B2B information. Gemspring Capital, has acquired the assets of Bobit Business Media Inc. Founded by Ed Bobit in 1961, Bobit provides a suite of digital media and marketing solutions, events and print media. The Torrance, California-based company operates in several verticals including fleet, transportation, beauty and law enforcement, serving a large customer base of over 1,700 B2B marketers. Deal terms not disclosed.
Content marketing. Sanoma has divested its content marketing operations to the original founders of the business. Net sales were €13m in 2017 and it employs some 50 people. With the transaction, Sanoma has now completed the divestment of its Belgian media business. Transaction terms were not disclosed. With companies operating in Finland, the Netherlands, Poland and Sweden, Sanoma has revenue of €1.4bn and more than 4,400 employees. What was once Europe’s largest magazine group is now predominantly an educational publisher.
Advertising. As part of its turnround plan, WPP has said it is looking to sell a stake of up to 80% in its market-research unit Kantar.
Consumer media. On Monday (19 November), shareholders of Australia’s 177-year-old Fairfax Media are expected to approve its A$4bn ‘merger’ with the Nine Entertainment Company (NEC). What is really an all-share acquisition will bring together the Channel Nine TV network and the country’s most famous newspapers – the Sydney Morning Herald, Melbourne’s The Age, and the Australian Financial Review. The enlarged NEC will reach over 50% of the Australian population and have EBITDA of more than A$500m. The economic heart of the deal is the A$1.4bn Domain property digital (60% owned by Fairfax), a 54% share of one of the country’s largest radio groups (Macquarie Media), ownership of the 1.25m-subscriber Stan video streaming service (launched jointly by Nine and Fairfax), of the hugely dominant Stuff web site in New Zealand, and some fast-growing digital services. NEC will leapfrog News Corp to become Australia’s largest media group. But that is only part of the story. Australia has been producing world class businesses for much longer than the 27 years of continuous economic growth which have created what The Economist recently described as “perhaps the most successful rich economy”. But, even before Australia’s 21st century transformation, its world leaders in retail, distribution, finance, mining and media were products of fierce head-to-head competition in relatively small domestic markets: world champion businesses were created in the heat of competition where only the winners could survive. In media, the ownership concentration helped broadcasters and publishers to achieve higher profit margins than their most of their worldwide peers. Now, it has become one of the first countries to deregulate traditional media with legislation which removed the restrictions that had previously prevented companies owning newspapers, television and radio stations in the same city. It also abolished the rule which had prevented a single TV broadcaster from reaching more than 75% of the population. The legislation effectively recognised the reality of Google-Facebook-Apple-Amazon domination over the traditional companies that had themselves once defined the media market simply by controlling transmitters and printing presses. NEC will now bring together an unrivalled portfolio of Australian media businesses spanning free-to-air and pay TV, radio, video streaming, digital services and newspapers. In characteristic style, the journalistic debate has centred on the impending loss of the Fairfax brand name and the perceived threat to the independence of its shrunken daily newspapers. Fairfax Media has actually been walking wounded for most of the 31 years since one Warwick Fairfax bankrupted his family business by taking it private with hundreds of millions of debt. It took him less than three years to blow his inheritance. In the aftermath of corporate and personal tragedy, the legendary company was fought over by the likes of Conrad Black, Robert Holmes a Court, Tony O’Reilly, Gina Rinehart, Kerry Packer (long-time owner of Channel Nine), and Rupert Murdoch. The debacle seemed to explain Fairfax’s spectacular loss of its much-vaunted “rivers of gold” classified advertising. Three digital start-ups – Seek (jobs), Carsales (cars) and REA (property) – were variously backed by media heirs James Packer and Lachlan Murdoch. The startups rapidly captured the Aussie market but not before being offered to, and rejected by, a complacent Fairfax. By 2012, the news group’s collapsing profitability precipitated the loss of A$2.7bn and 1,900 jobs, and it’s been downhill almost ever since. NEC has been through the wars too. Along with the former ACP Magazines, the TV group was sold to private equity by James Packer in 2006, just months after his father’s death. He decided to concentrate on investment in casinos, and the impatient timing initially worried observers. But Packer and his investors were soon laughing all the way to the bank over a peak-market A$5bn price tag which eventually all but drowned the local operations of CVC Capital Partners. Seven years years later, Nine bounced back with an IPO. And, in 2017, long-promised Aussie legislation dramatically loosened the constraints on media ownership. The reform was not really any kind of far-sighted political vision but the result of decades of not-so-subtle campaigning. Kerry Packer had spent much of his later life being assured by politicians that he would (soon…) be allowed to do exactly this deal. In ways that are difficult to imagine elsewhere in News Corp, Rupert Murdoch’s Aussie newspapers have continually rubbished their closest rival Fairfax and predicted its demise. In 2016, James Packer and Lachlan Murdoch even collaborated in a book prematurely celebrating the “death” of Fairfax. This year’s surprise ‘merger’ was sprung by former Treasury Minister Peter Costello (now chair of Nine) and Fairfax chair Nick Falloon (who had previously been CEO of what is now NEC). The deal is significant, beyond the shores of Australia, because it coincides with a real change in the prospects for traditional media everywhere. The emergence of fake and faulty digital news has had the unexpected consequence of reinforcing the value of traditional news brands among paying audiences and – at the same time – persuading Facebook and Google not to become mainstream content producers. For all the earlier warnings that traditional media had to ‘get’ tech before the tech companies ‘get’ media, it is becoming clearer than ever that the tech companies have (mostly) been warned off. Despite the intense competition among content providers in the nascent video streaming market, it is now easy to envisage two broad types of media business in the future:
- Technology firms funded primarily by advertising, marketing and data
- Content companies funded primarily by readers, viewers and members
The distinction will not, of course, always be so neat and clean, evidenced by the competition in streaming and e-commerce; and few media groups will abandon the search for some advertising revenue. But it seems clear that the best traditional media companies will increasingly find profitable new ways to distribute news, information and entertainment across the whole range of video, audio, reading, experiential media, e-commerce and interactive services. There will be an explosion of cross-media brands that will ease their journey through media convergence. That’s the significance of the NEC deal. However, we can’t assume there is a robust, far-reaching strategy ready to execute. After all, this deal can be paid-for, in the medium-term, just by staff savings and the cross-promotion of Domain, Stan, and Nine Network TV. But NEC can soon be expected to develop a powerful multi-channel approach, on the following lines:
Content: centralised all-media production and commissioning for News, Sports, Finance, Lifestyle, and Entertainment with ‘super brands’ for each category that will appear online, on TV, radio and in print.
Subscriptions: marketed in packages across streaming, payTV, online, and print
Retail: branded e-commerce, information services and events promoted across all media
That strategy would represent a new kind of fluidity for traditional media as it navigates the digital rapids. It can become the inspiration for media groups everywhere when they – and their governments – get up to speed. The future is there.
Magazines. Meredith Corp has agreed to sell Fortune magazine to Chatchaval Jiaravanon, of Thailand, for $150m. The cash price for the former Time Inc print-centric brand is thought to be some 15 x EBITDA which, therefore, represents another dealmaking coup for Meredith just a month after it secured $190m for Time magazine. Jiaravanon’s family owns the Charoen Pokphand Group (CPG), a broad-based international conglomerate and one of Thailand’s largest industrial groups. Fortune’s print business has been declining sharply and its 2018 ad pages are said to be 25% down on last year. But digital advertising and conferences are reported now to account for more than 60% of the $100m revenue. Now, what can Meredith get for the other two former Time Inc magazines it is selling, Sports Illustrated and Money?
Broadcast-streaming. Disney is in talks with Hearst to sell-off its interest in five European cable channels (History, H2, Crime & Investigation, Blaze and Lifetime) that are part of the larger A+E Networks joint venture between the companies and serve the UK, Italy, Germany, Spain and Portugal. Disney last week agreed to divest the channels as a condition of receiving European Commission approval for its acquisition of 21st Century Fox which includes the National Geographic channels. The European condition is one of the final barriers to the Disney acquisition of Fox, which has already been approved in the US on condition that it divests Fox’s 22 regional sports TV stations. If the deal proceeds as expected, it will be interesting to see whether A+E ownership shifts the European priorities of Hearst whose primary business there is currently its London-based magazine-media group, with additional investments in business information and web services. The A+E deal would certainly strengthen the UK’s role as Hearst’s second market after the US.
B2B information. Wolters Kluwer, the €4.5bn-revenue information services group, has acquired eVision Industry Software BV, a global provider of industrial operational risk management software, for $145m plus earn-out. eVision is a global leader in industrial operational risk management software for the oil & gas, chemical, and pharmaceutical industries. It serves five of the oil & gas majors and is expanding into chemicals and pharmaceuticals. eVision recorded revenues of $25m in 2017 and is expected to achieve double-digit revenue growth in 2018. While its on-premise software remains in strong demand, future growth is expected to be driven primarily by recurring revenue from its cloud-based offerings. Up to $35m in additional consideration is linked to performance.
B2B information. Infomedia, the 30-year-old Australian listed provider of SaaS solutions to the parts and service sector of the automotive industry, has agreed to acquire the automotive data solutions company Nidasu. Transaction terms not disclosed. Infomedia supplies online parts selling systems, publications, data analysis and information research for the automotive and lubricant industries.
Magazines. Penske Media Corp, of New York, is acquiring Art Media Holdings, parent company of the magazines ArtNews, Art in America, and Antiques, from art collector, investor and philanthropist Peter Brant. The price is said to be between $20-25m. The privately-owned Penske, which owns Variety, Rolling Stone, Deadline, WWD, and Robb Report, this year secured a $200m investment from Saudi Arabia. Founder-CEO Jay Penske has been pressured to unravel the deal in recent weeks, as a result of the grisly killing of a dissident Saudi journalist in Turkey. Whether or not Penske unwinds the investment, the controversy might derail his rumoured plans for an IPO in 2019. He might just need some other private investors to fill the gap.
Magazines. Intermedia Group, of Australia, has bought a majority stake in the Sydney-based beauty trade magazine Esprit Magazine. The 14-year-old Esprit was founded by British-born journalist Andrea Ferrari. The deal will add to Intermedia Group’s offering for the beauty trade industry, which currently includes Spa+Clinic and Professional Beauty. Terms not disclosed.
Events. MTV is expanding its live events in the US by acquiring the SnowGlobe Music Festival. The three-day New Year’s Eve festival takes place in South Lake Tahoe, California. This year’s lineup includes Above & Beyond, Diplo, Eric Prydz, Rezz and RL Grime headlining among more than 40 artists. SnowGlobe will also showcase extreme winter sports demonstrations. Terms were not disclosed.
Naspers, of South Africa, is preparing to de-merge Africa’s largest TV group MultiChoice whose DStv was a pioneering digital satellite broadcaster when it launched in 1995. With its Showmax streaming service, MultiChoice provides some 14m subscribers (half in South Africa) with original content and international programmes, including English Premier League football, Formula One, and Game of Thrones. The $3bn-revenue company makes pre-tax profit of $400m and claims to be “one of the fastest growing pay-TV operators globally” so analysts reckon the 2019 IPO may be valued at $6bn. The de-merger was hailed by the Naspers CEO as “a significant step as we continue our evolution into a global consumer internet company.” It’s a simple enough statement from a 103-year-old company which has dramatically morphed from a traditional media group into one of the world’s savviest tech companies with investments in 130 countries. What started as the publisher of a single daily newspaper in Cape Town is now the world’s 65th largest listed company. That phenomenal climb has been propelled almost entirely by China’s largest internet group Tencent, in which Naspers invested $32m (for a 40% stake) back in 2001. Tencent’s market capitalisation is now a whopping $358bn. Naspers’ own value is some $90bn – less than just the price of its 31% stake in the Chinese company. But there is much more to Naspers’ place as Africa’s most valuable company, which is consolidated by its fast-growing operations across digital media:
Classifieds: Its companies OLX, letgo, Avito and Dubizzle have more than 330m monthly active users around the world across 41 markets. Revenues last year grew 47% to $628m.
Retail: Its etail and online travel operations are spread across Central and Eastern Europe, India and Africa, and include eMAG, Takealot and MakeMyTrip. Revenues grew 36% to $2.1bn
Payments: Its PayU is one of the world’s largest online payment service platforms, with operations in 17 markets across Africa, the Middle East, Central and Eastern Europe, India, and Latin America. The online payment systems are made for emerging markets where credit cards and PayPal don’t always work. It also has investments in Kreditech and Remitly. Revenue grew by 58%.
Food delivery: It claims leadership in 40 markets through majority-owned iFood, with minority holdings in Swiggy and Delivery Hero. Total volumes and revenue grew by 65%.
Naspers also has 28% of Mail.ru, the leading Russian internet company, and a range of investments in digital startups. Its stakes in private tech companies include 70% of Brazil’s Movile, a mobile platform for content, food delivery and tickets sales in Latin America. Altogether, Naspers has invested some $10bn in media-tech companies around the world and has built a reputation as a cash-rich investor which gives companies the room to operate independently, takes a long-term view and has global reach. It’s a good partner, has been described as “the biggest tech investor that Silicon Valley ignores,”and makes the majority of its revenue in Brazil, Russia, India, China and South Africa. But the Naspers’ stock market valuation worries investors because of the way the Tencent stake is discounted. Hence the need for some divestments. For all the dominance and high margins of MultiChoice pay TV, its longterm is clouded by the arrival of Netflix (which is expected to have 500,000 African subscribers within 18 months) so the IPO may be just in time. Naspers’ original publishing business, Media24, has no such prospect. It was established as National Press, to produce a Dutch-language newspaper for South Africa’s Afrikaner population in 1905. The company and its publications became unsubtle mouthpieces for the National Party, which came into power in 1948 and instituted the apartheid system of racial segregation that continued until 1994. Twenty-four long years later, Media24 is still South Africa’s leading media group, publishing some 40 magazines, 80 newspapers and a growing range of news and lifestyle digital services. But the print-centric company is now far from the core of the parent company whose CEO always sounds a bit defensive when discussing it. No wonder. Last year Naspers made trading profit of $3.4bn on revenues of $20.1bn. The Media24 contribution was invisible: trading losses of $30m on flat revenues of $374m. It didn’t even merit a mention in the press release. So, the traditional media subsidiary – with all the familiar challenges of print decline and revenue-light digital – is feeling pretty unwanted by a parent company whose focus is miles away. But Naspers’ recent public commitment to invest $300m specifically in South African startups and the dark history of its regretted involvement in apartheid are clues to the sensitivities that may prevent a simple sale of Media24. As the dominant corporation in a country with plenty of growth challenges, Naspers might face a backlash if it risks the future of the newspapers, magazines and digital media that help to define South Africa. It may instead explore the possibility of a creative partnership with an international media company to revitalise Media24. That may even be the brief for the publishing company’s newly-appointed CEO. Potential partners could include two familiar media companies that have successfully diversified: Hearst Corp (with which Media24 publishes South Africa editions of the magazines Men’s Health, Women’s Health, Runner’s World and Bicycling); and Axel Springer with which it launched the local edition of Business Insider earlier this year. Either of those family-controlled companies could inject growth into Media24 through events, video channels, and content-linked e-commerce. They might also welcome the opportunity of wider collaboration across digital media and elsewhere in Africa. Naspers is the cash-rich, hands-off partner that any media company would want. Just watch.
B2B. UK listed company Centaur Media confirmed it is appointing advisers to explore potential asset sales, as part of a downbeat trading update for shareholders. The company, which made operating profit of £6.6m on revenue of £72.6m in 2017, is best known for its marketing-media information services, events and publications including Marketing Week, eConsultancy, Celebrity Intelligence, Creative Review, Design Week, and the Festival of Marketing. It also has strong B2B brands in the legal market (The Lawyer) and finance (Money Marketing, Mortgage Strategy, and Platforum). CEO Andria Vidler (ex EMI and Bauer Radio) has successfully swung the business towards paid-for information and events – and sharply cut operating costs. But the inexorable decline in print advertising have been painful. In 2017, 66% of revenues came from events and paid-for digital content and just 10% from print (halved in two years). The company sold its non-core consumer homebuilding magazines and events to Future Plc for £32m (8 x EBITDA) but even this will dilute earnings. It is assumed that Centaur would most wish to divest itself of relatively minor magazine-led sectors like engineering. But its announcement is likely to attract bids/merger proposals for the whole company. UK favourites might include the Wilmington Group (a merger would create a stronger listed company from two sagging, sub-scale ones); the acquisitive Mark Allen Group (which could use Centaur to reverse itself onto the London stock exchange), DMGT, Incisive Media – and, of course, private equity. Cherry-pick bids for the prime brands in marketing and law might come variously from Euromoney, Penske, Crain, and Bloomberg. Centaur’s exhibitions portfolio (including Subcon, The Meetings Show, The Business Travel Show, and Travel Technology Europe) will also attract bids variously from Informa, Reed Expo, ITE, CloserStill, and Clarion. The 37-year-old Centaur Media employs 564 people. Its share price has fallen 17% in the past 12 months and is some 60% below the IPO price in 2004. That depressed price implies shareholder pessimism about the chances of attractive bids. But the £62m market value is also encouraging would-be buyers to take another look at a company with some well-established B2B brands and the potential for the international expansion that has so far eluded it.
Broadcast-streaming. UK-based software maker Massive Interactive has been acquired by Italian company Deltatre for $127m, in a deal designed to create a rival to global giants Disney and Endeavor in online sports streaming services. The transaction is rumoured to create a joint company valued at up to $1bn. Turin-based Deltatre’s client base includes the English Premier League football, ATP World Tour tennis, and the NFL. Massive, founded in 1996, provides video technology to a variety of broadcasters and entertainment companies, including the BBC and Sony Pictures. It will become a division of Deltatre. The combined entity will have 1,000 employees across 18 offices worldwide, making it one of the largest providers of streaming technologies to sports groups.
News. Donerail Group and newspaper publishers McClatchy Co. and AIM Media are reported to have submitted bids for Tribune Publishing Co.
B2B Events. Access Intelligence—parent company of Folio —has acquired P3C Media, owner and operator of the Public-Private Partnership (P3) Conference and Expo, for an undisclosed sum. Founded in 2012, the three-day P3 Conference and Expo attracts over 1,300 public- and private-sector professionals annually, and has since spawned a series of ancillary summits, including the P3 Airport Summit, the P3 Federal Conference, the P3 Higher Education Summit, and the P3 Water Summit.
Broadcast-streaming. EndemolShine, the London- and Amsterdam-based TV production giant, co-owned by Fox (soon Disney) and PE firm Apollo, has suspended its sale process due to a lack of sufficient interest on terms favourable to the company. Maybe Disney will want to keep it.
News. Two optimistic new media fund-raisings last week are a warning that daily newspapers must abandon their go-slow digital strategies or risk being shredded by a new wave of paid-for services. In the US, the two-year-old The Athletic now has 100,000 subscribers (60% of them millennials) paying some $60 a year for sports content, and renewals are running at 90%. Subscribers get access to in-depth coverage of most major sports in the US and Canada. Under the slogan “Fall in love with the sports page again”, it concentrates on high-quality, low-volume insightful journalism (it has almost 300 staffers) backed by hundreds of enthusiastic reader-contributors. It’s a timely reminder that Jessica Lessin’s approach with The Information (2-3 tech business stories daily for $500 subscribers) can work even on a more consumerist stage where there is seemingly quite enough content already. The Athletic incentivises its journalists to write content that will bring in more subscribers – and gets readers to rate everything they read. Now it’s raising $70m from top tech investors who are falling over themselves to predict a Netflix-like future for the service. Across the Atlantic, James Harding a former editor-in-chief of News Corp’s The Times and the BBC has raised backing from some wealthy friends and crowd-funding to plan the 2019 launch of Tortoise Media. It will be a “slow” news service which will not cover every news story and will not attend press conferences, but will “take time to see the fuller picture, to make sense of the forces shaping our future, to investigate what’s unseen”. Under the slogan “Slow Down, Wise Up”, Tortoise plans to offer three products: A Daily Edition on smartphones, with five key pieces, breaking down the most important issues of the day, in text and video; A daily editorial conference, the ThinkIn (sounds just a bit like the New York Times’ brilliant The Daily podcast); and a quarterly print magazine. It almost doesn’t matter that Harding describes his new venture pretentiously as a cross between TED and The Economist or that UK commentators have drawn flimsy parallels with the US rich list who have been lining up to buy the traditional pillars of journalism. But these and other ventures (more in the US than elsewhere, so far) emphasise that the apparent collapse of newspaper journalism has much more to do with its broken business model than with some lack of interest from would-be readers – and investors. The key to what will surely become an explosion of high-quality, targeted digital “news” services is that they are paid-for and will carry little or no advertising. Therein lies the challenge for traditional news brands. Most newspapers (notably the quality national dailies in the UK) still cannot quite see that their lost lamented advertising continues to impede reinvention of these still-powerful brands. They must adjust to a future based largely (if not wholly) on readership revenues from premium-priced specialist services. But it is their vain pursuit of cheaper and cheaper advertising that drives free and low-price circulations and the insistence on slavishly digitalising the printed newspaper ‘package’. There are notable exceptions but innovation is being stifled by the general reluctance to create digital offerings that really are distinct from (and competitive with) the newspaper tradition. The result is that the these print-centric groups find themselves with strategies which: over-state the value to readers of their traditional news-led ‘package’; limit their appeal to new audiences – and simply invite competition from digital services which don’t have a legacy product to defend. Almost without exception, the new-wave services underline the real requirement for specialist and exclusive content rather than the general news to which most daily newspapers remain so attached and which still account for such a large proportion of their costs. So, every time someone comes up with a digital service covering sport, politics, personal finance or foreign affairs, newspaper executives know they could compete if only they dare risk accelerating the revenue decline of their traditional ‘package’. But ‘disruption’ is all about deconstructing the consumer offer as it was with the attack on music ‘albums’, on bundled cable TV subscriptions, and on no-choice retail banking services. Many consumers are demonstrably willing to pay for journalism. It’s just that they will pay only for what they actually want. There is growing evidence that deconstructing the newspaper ‘package’ can be sustainable. The New York Times now has 400,000 subscribers paying $6.95 monthly for its daily crossword puzzle – some 30% of the full subscription for the whole digital ‘newspaper’. From recent reports that the newspaper now has 4m subscribers – 75% of them digital – you can surmise that the crossword (and also cooking) services really are helping to enhance the value of the whole New York Times subscription as well as attracting those who only want part of the package. Of the 203,000 of new digital subscribers gained by the NYT during July-September 2018, some 60,000 paid only for the company’s cooking and crosswords services. If ever there was a cue for daily newspapers everywhere to start unbundling their best content, surely the New York Times’ crossword is it. In the UK, even now, no media is better placed than the national daily newspapers to provide really strong digital ‘verticals’ on a range of topics from politics to football. Hurry.
B2B information. The UK-based £1.5bn B2B information and events group Ascential Plc has acquired the four-year-old US-based Flywheel Digital, a provider of services to consumer product companies trading on Amazon. The company self describes as “a collection of experienced practitioners focused solely on Amazon. We have spent years deconstructing the Amazon machine to provide your team with actionable insights that translate into sales.” Its 70+ customers mostly comprise large-scale US consumer product companies, and it has 90 staff in Baltimore and Seattle. Ascential is paying an initial $60m plus an earn-out based on revenue for 2019-21 which is expected to pay-out in the range of $47m-$196m. Total consideration is capped at US$400m. In 2017, Flywheel grew its revenue by more than 150% – but delivered pre-tax profit of just $4.8m. Analysts are expecting PBT of some $9m on revenue of c$30m next year. Ascential (which grew out of the former Emap Plc‘s B2B media and exhibitions) is being praised by investors for a robust strategy which has artfully combined the sale of non-core but soundly profitable magazine brands and exhibitions (even at prices which diluted profits) with cherry-picked (and sometimes high-priced) digital acquisitions. As if to reinforce the disciplined mix of organic growth alongside the steady stream of acquisitions, the company last week launched ‘Edge by Ascential’ to provide the world’s leading brands and retailers with e-commerce performance data. In 2019, Ascential Plc is expected to make EBITDA profit of some £135m on revenue of £400m. That 30%+ operating margin (compared with 25% this year) would be the reward for CEO Duncan Painter’s gutsy strategy which sees a once UK-centric group get about 50% of its revenue from the US and only 20% from the UK. Good timing. The next strategic test for Ascential could be to decide whether its high-value information services really fit with its global events portfolio (including the wobbly but huge Cannes Lions and the turbo-charged Money 20/20). Perhaps the soaring price of exhibitions and festivals (up to 17x EBITDA) has already given Painter some ideas about what transformative data-tech businesses he could buy with proceeds that could so nearly match Ascential’s total market value. The equally acquisitive Informa and Blackstone may already be sharpening their pencils.
B2C digital. Germany’s ProSiebenSat.1 TV group has acquired US online dating site eHarmony, in the first significant deal of its new e-commerce joint venture with General Atlantic, the US private equity firm which once helped Axel Springer to build-up its global classifieds business. The Munich-based broadcaster bought eHarmony via its newly-created NuCom division, in which General Atlantic took a 24.9% stake in February. NuCom in turn owns 94% of Parship. eHarmony, which was founded in 2000 in Los Angeles and expects to register 2.8m new users this year, complements ProSieben’s own Parship dating franchise, which is said to be the market leader in Germany. Parship and sister brand ElitePartner claim some 2m registrations a year. The transaction follows through on ProSieben’s push to diversify away from its core commercial TV franchise, where ad revenues are flat amid disruption by Netflix et al. Privately-held eHarmony has raised a total of $113m in two funding rounds, the most recent being in 2004, when it was backed by The services will now expand into the US, Canada and Australia. Financial terms of the deal were not disclosed but it is rumoured to have valued eHarmony at only $85m. Rival Match has a market value of $13.7bn. The 18-year-old listed company ProSiebenSat.1 claims to be the leading German entertainment player, and has a strong e-commerce business: “We want to offer great entertainment – whenever, wherever and on any device. Every day, 45m TV households in Germany, Austria and Switzerland enjoy our 14 free and pay TV channels.” ProSiebenSat.1 claims to generate more than 1bn online video views per month and to invest more than €1bn euros in 120,000 hours of TV programming.
News. Czech investor Daniel Kretinsky’s Czech Media Invest has acquired a 49% stake in Le Nouveau Monde, the principal shareholder of Le Monde, France’s 74-year-old daily (afternoon) newspaper. He has reportedly bought about half of the shares formerly held by Lazard banker Matthieu Pigasse. Terms of the deal were not disclosed. Earlier this year, Kretinsky acquired several magazines from Lagardère, including Elle (most of whose international editions are published under licence by Hearst Corp, of the US) and TV listings magazine Télé 7 Jours. He also owns the French newsweekly Marianne. In the Czech Republic, Kretinsky owns EPH, the largest energy group in Central Europe. Two years ago, he sold 31% of a EPH infrastructure subsidiary to Australia-based Macquarie for $1.6bn. He co-owns the Czech tabloid Blesk, the country’s most widely-read newspaper, and also football club Sparta Prague.
Broadcast-streaming. The 140-year-old US media company E.W. Scripps has agreed to acquire 15 television stations in 10 markets from Cordillera Communications for $521m. The deal will give Scripps a total of 51 stations in 36 markets, reaching 21% of all US households. The acquisition follows a reorganisation of Scripps to focus on TV stations, some 10 years after it spun off the now-listed company Scripps Network Interactive (home of HGTV, The Food Network and The Cooking Channel). Two years ago, Scripps sold its newspapers to Gannett and, more recently, sold-off its remaining radio assets.
B2B information. Legal publisher Fastcase has acquired the Law Street Media legal news platform, working with founder John A. Jenkins, the former President and Publisher of CQ Press, and a team of reporters to evolve the online news platform into an enhanced daily news and analytics hub. When the site is relaunched in 2019, the retooled platform will highlight national and state docket litigation, regulatory developments and state bar news. Transaction terms not disclosed.
Broadcast-streaming. Propagate, the production house headed by Howard Owens and Ben Silverman, has acquired Electus and taken a majority interest in Artists First. Electus is the producer and distributor of series including NBC’s “Running Wild with Bear Grylls,” ABC’s “The Toy Box,” the CW’s “Jane the Virgin,” and Discovery’s “Darkness”, along with production companies Big Breakfast (“Adam Ruins Everything”) and Notional, producer of Food Network’s “Chopped” franchise. The price paid for Electus was rumoured to be around $35m. Electus had bought the interest in Artists Direct (formerly Principato-Young Entertainment) in 2017.
B2B information. Wolters Kluwer Legal & Regulatory has acquired eVision Industry Software BV, a global provider of industrial operational risk management software, for $145m, plus a deferred contingent consideration. eVision provides industrial operational risk management (IORM) software for the oil & gas, chemical, pharmaceutical, and other high-risk and high-precision industries.
B2B information. Randall-Reilly, a leading B2B data company in trucking, construction, agriculture and other industrial markets, has acquired Transportation Data Source (TDS) from trucking pioneer Lyn Simon and TDS co-founder Helen Simon. The TDS acquisition opens up new markets for Randall-Reilly, including factoring, insurance, brokerage/logistics and fleet management solutions. Transaction terms not disclosed.
News. Advance Publications Inc, of New York, has acquired The Esports Observer, a provider of esports business news and events from Bitkraft Esports Ventures network. Advance’s subsidiary American City Business Journals, which publishes Sports Business Journal, had previously acquired a minority interest in The Esports Observer in 2017. Earlier in October, Advance acquired a majority stake in esports analytics firm Newzoo. Transaction terms not disclosed.
Magazines. Hearst Corporation, in the US, has acquired seven weekly news brands from Hersam Acorn Newspapers, in Connecticut. This is the fifth bolt-on newspaper deal in two years by the privately-owned Hearst and emphasises its distinctive strategy. Over the past 60 years (almost half of the company’s lifetime since being founded by W.Randolph Hearst in 1887), the company’s most profitable activity has shifted in turn from newspapers through magazines, television and now to business information. What is the world’s oldest multi-media group was built on the successive fortunes of daily newspapers and magazines. Then, in 1990, Hearst became a 20% shareholder in the Disney-controlled ESPN sports cable network which, alongside other TV networks, have frequently accounted for almost 100% of Hearst profits. The recent expansion into global business and financial information sees Fitch Ratings and medical data services now generating more than 50% of profits. Such shifts have been common enough among media companies. But the difference is that Hearst sticks with its businesses even in decline and its policy of rehabilitating yesterday’s winners seems to pay off. Total revenues last year were some $10.8bn – at least 150% up over the past decade. Although the numbers are bolstered by some chunky acquisitions, Hearst’s consistent growth underlines the enduring success of a media group whose pre-tax profits may now be $1.5bn. For all the disruption of its once-dominant print businesses, the so-versatile Hearst has scarcely missed a beat. Its newspapers may now be one of the smaller divisions but they are doing better than most of their peers. With more than 3,000 employees, Hearst Newspapers publishes 24 dailies and 63 weeklies in Texas, California, Connecticut and New York state, and increased profits for the sixth consecutive year in 2017. Now, Hearst is planning the reinvention of its embattled magazines. It is seven years since it spent $900m on 13 worldwide editions of Elle – just as the international licensing of magazine brands that it had pioneered with Cosmopolitan 25 years before, was coming off the boil. Last year, it paid an estimated $210m for Rodale, publisher of Men’s Health, Women’s Health, Prevention and Runner’s World. But four events in 2018 have set the scene for the coming revolution at Hearst Magazines:
- In January, Hearst Corp CEO Steve Swartz – in his annual letter to staff – singled out the under-performing magazines division, which had declined in profit after four years of modest growth: “Still, the magazine business needs more change.” In the famously collegiate company, this represented a stiff public rebuke for its once world-conquering magazines.
- Hearst Magazines paid $50m to settle a proposed class-action lawsuit accusing it of breaking data protection laws in Michigan. The settlement (and up to $17m in costs) will wipe out much of this year’s magazine profits.
- In June, it was announced that David Carey would be stepping down after eight years as president of Hearst Magazines. He would become titular chairman of Hearst Magazines for a year (while on a Harvard course) but his name quickly started coming off the company’s boards.
- A month later, Troy Young, who has led the digitalisation of the company’s magazine brands since 2013, was appointed to succeed David Carey. He wasted no time in digitalising the top team, but not before bidding his predecessor a tepid farewell: “David has been and will continue to be an important advisor, and I’m happy to have his guidance and institutional knowledge as I take on this new role.”
Twelve years ago, Frank Bennack (longtime chairman and architect of the modern Hearst Corporation) presided over the opening of its landmark Manhattan headquarters by saying it had effectively been paid-for by Helen Gurley Brown, the legendary editor whose revolutionary Cosmopolitan magazine had transformed the company’s profitability in the 1960s. Cosmo once had almost 70 worldwide editions but faltering revenues and magazine closures (the latest in Australia) underline the need even for the monster brand to find profitability beyond print. But traditional media’s persistent challenge is how to compete with digital-only insurgents while trying to defend (or slow the inevitable decline of) still-profitable legacy businesses. Troy Young addressed that conflict head-on by establishing digital teams, separately managed from the print magazines. The claimed digital profitability may have been inflated by discretionary cross-charging for content. But online audiences have almost doubled in the past five years and digital now accounts for one-third of magazine revenues. In the US, Hearst’s 20 magazine-centric brands average more than 1.4bn monthly page views and 15bn annual video views, while attracting 146m social followers and 81m monthly unique visitors on Snapchat Discover. Young’s team launched five new brands on Snapchat, making Hearst the largest publisher on the platform. He also developed e-commerce (mainly through the BestProducts site) and now aims to more than double retail sales to $500m within two years. The revolution has begun, with Young’s decision to bring management of the digital and print teams back together. He is expected also to cut-back the company’s long tail of under-profitable magazines, each with their own dedicated content teams. Nowhere is this more obvious than the UK whose 20 brands (and 740 people) made operating profit of only £5m in 2017. Well over 50% of that profit came just from the venerable Good Housekeeping. Hearst UK is under the microscope in New York also because of its wobbly strategy to staunch the loss of magazine advertising by distributing hundreds of thousands of free copies. The current ABC circulations of the UK company’s seven largest magazines have been padded by an average of 23% of free copies and even Good Housekeeping is 17% free. Steve Swartz’s words are ringing in their ears: “…we need the readers to pay more for the product. And we need to find a way to make digital subscription products work for magazines in the way that they are starting to work for newspapers.” Any new business model for these magazine brands will not be strengthened by print circulations that are hyped with free copies. Troy Young’s appointment makes Hearst Magazines, arguably, the first major group to dare to do the obvious and subordinate print to digital. Early signs that the revolution is working will include some digital-only acquisitions in women’s interest markets in the US and UK, and a telling decision (perhaps in 2019) to change the division’s name to something like “Hearst Lifestyle”. It’s no longer all about magazines.
B2B information. Commodity price reporting agency Argus Media has acquired Integer Research, a London-based provider of market intelligence to the fertilizer, industrial chemicals and wire and cable industries. Terms of the transaction were not disclosed. Argus, which has some 950 staff (50% editorial), and is also headquartered in London, produces price assessments and analysis of international energy and other commodity markets, and offers consulting services and conferences. The company was founded in 1970 by Jan Nasmyth, a former UK Treasury official, as a weekly newsletter called Europ-Oil Prices covering European petro markets. It created the ASCI (sour crude index), which Saudi Arabia now uses to price exports to the US. In 2016, General Atlantic private equity acquired a 52% shareholding in a deal which valued Argus at £1.4bn. The remaining shares are owned by staff. In the year to 30 June 2017, the company had £70m revenue with a 68% EBITDA profit margin. It claimed to have 6,000 customers (mainly subscribers) in 140 countries but was some 75% dependant on the UK and Europe.
B2B information. Northstar Travel Group, of the US, has acquired the nine-year-old UK-based Tnooz (“talking travel technology”) as part of a plan to develop its Phocuswright media. Tnooz will be merged with PhocusWire. Transaction terms not disclosed. Northstar is a B2B information and events company in travel, meetings and hospitality. It claims more than 1.4m monthly uniques through brands including Travel Weekly in the US, Asia and China, Business Travel News, and MeetingNews. It also operates the Burba Hotel Network of 25,000 hotel industry leaders in over 140 countries. Northstar, which is owned by EagleTree Capital, is believed to have had 2016 revenues of $80m with a 24% EBITDA profit margin. The company is independent of the UK’s fast-growing Jacobs Media Group (JMG) which publishes Travel Weekly in the UK and across Europe, as well as The Caterer, Aspire, Connecting Travel, the Cateys and the Globe Travel Awards. The privately-owned JMG now generates almost half of its revenue from events, with its fastest growth outside the UK.
B2C Digital. eBay has agreed to buy the website Motors.co.uk from Cox Automotive for an undisclosed price. Motors.co.uk will merge into eBay’s classified ads site, Gumtree. The deal is expected to be completed by early next year. The combined group will offer more than 620,000 car listings. Current market leader, the listed company Auto Trader is believed to have 500,000 car listings, and has revenues of £300m and operating profit margins of 66%. A big fight looms.
B2B information. Thomson Reuters has agreed to acquire Integration Point, which offers a comprehensive suite of global trade compliance products encompassing almost all industries, geographies and trade programs. This acquisition is in line with its strategy (following the recent sale of 55% of its Financial & Risk division to Blackstone) of investing in its core offerings in the legal, tax, regulatory and media markets. Transaction terms not disclosed.
News. The Arizona-based Times Media Group last week completed the purchase of Glendale Star and the Peoria Times’ owner Pueblo Publishing Inc. Transaction terms not disclosed.
B2B information. Oracle is buying DataFox, a startup that has amassed a company database — currently covering 2.8m public and private businesses, adding 1.2m each year — and uses AI for analysis and business predictions. The resulting business intelligence can be used for a range of CRM-related services including prioritising sales accounts and finding leads. Terms of the transaction were not disclosed but the four-year-old DataFox was thought to be valued at some $50m.
B2B information. Dodge Data & Analytics, a leading provider of market intelligence and analytics to the North American construction industry, has acquired San Diego-based Integrated Marketing Systems (IMS), a provider of Advance Notice public construction opportunities to the architecture and engineering sectors. Transaction terms not disclosed.
Radio / Outdoor advertising. Global Media & Entertainment, the UK’s largest commercial radio company, has paid a reported £450m to acquire Exterion, the £370k-revenue outdoor advertising group which has a 20% share of outdoor advertising in the UK and also operates in Ireland, France, the Netherlands and Spain. It has the advertising contracts for the London underground and rail networks, for mass-transit systems in Newcastle, Liverpool, and Glasgow, and buses right across the UK. The deal follows Global’s September purchase of Primesight and Outdoor Plus and means that, in just four weeks, the privately-owned radio and music group has splashed some £750m to become a 35% UK leader (head-to-head with global leader JCDecaux) in out-of-home (OOH) advertising. The three acquisitions (all from private equity) have almost doubled Global’s workforce to more than 2,000. They highlight the increasingly ambitious strategy of a group which was formed in 2007 by the successive acquisitions of UK radio networks from Chrysalis, GCap, and The Guardian. Those radio deals brought together some of the UK’s most popular broadcasting brands including Capital, Heart, LBC, Classic FM, Smooth and Radio X. They also created an unwelcome profile for the Global boss Ashley Tabor. He’s the son of Michael Tabor, a British tax exile who has amassed a fortune from a smudgy lifetime of bookmaking, horse-breeding and property. Almost 50 years ago, Tabor Sr was banned from all UK racecourses for allegedly paying jockeys for information. Ashley himself attended a 400-year-old British boarding school but left at 16 to work in go-for jobs with radio stations and music companies. Along the way, he claimed the credit for discovering some well-known artistes. He moved into festivals and music publishing, and introduced his father to entrepreneurs like Simon Cowell. That was the spark for the Tabor family strategy to gatecrash the UK radio business. Along with fellow British and Irish gamblers and currency speculators scattered across the tax havens of Monaco, the Channel Islands and the Caribbean, Michael Tabor ponied up some £400m for his son’s leap into UK broadcasting’s big league. The 2007 launch of Global is now credited with the resurgence of the country’s commercial radio, although it did coincide with Bauer’s acquisition of EMAP radio which has led to the German company’s broadcast expansion across Europe. Global’s revenue has increased 34% during 2009-17, and radio has held steady at almost 6% of all UK ad spend during a period when the internet has been gouging almost every other media category. In a country where the tax-funded BBC still gets more than 50% of the radio audience, regulator Ofcom says Global has 22.8m weekly listeners (42% of the whole commercial radio audience) comfortably ahead of Bauer’s 17.4m (32%). Although the stats show that the growth of 35-64 year listeners is camouflage for a steady fall-off in 16-34 year olds, UK commercial radio is in good shape as it celebrates its 45th anniversary. Against all the odds of an economy that was blitzed by the 2008 banking crisis and is being depressed now by the unknowns of Brexit, Global is proving to be a good investment for its sun-tanned owners. In 2017, it made EBITDA profit of £77.8m on revenues of £302.6m (a 26% margin). This might imply a valuation of almost £1bn, especially if radio advertising keeps growing at 5%+ as forecast (it was a market-beating 12% up in the first quarter of 2018). Profits have generally been buoyed by the UK’s 2010 deregulation of radio which relaxed the restrictions on ownership and content – in response to the sector’s previously precarious conditions. So, with end-2017 net liabilities of £350m, Global is one traditional media business that is not disappointing its investors. More so because they own the UK business through a Jersey-based holding company (ultimately owned in the zero-tax British Virgin Islands) which eliminates taxable profits by charging interest rates of up to 15% on their loans. So, the company has continued to declare “a statutory loss” throughout a decade of undoubted success. It does its best to avoid coverage: no media company was ever more media-shy than Global. The tax planning may help to motivate its £3m-a-year charitable fundraising and London’s Global Academy which was opened two years ago by the country’s two most popular Royal princes. But, then, there’s the jarring picture of the low-profile founder paying £100m for the most famous apartment in London. Insiders snipe that Ashley Tabor’s relationship to Global’s main investor is clear from his £4m average remuneration. But the company’s dominant position in UK commercial radio, its slowing growth, and fears of some kind of future tech disruption, has had Tabor searching for future growth options. Like CBS and Clear Channel in the US, in previous years, and HT&E (formerly APN) in Australasia currently, Global has alighted on radio’s potential fusion with OOH, whose enduring appeal has been its ability to reach all consumers. The growth of digital OOH creates the opportunity to augment the advertising with video and live broadcast content including news, sport, weather, and retail. It can also be personalised through interaction with geo-tracked smartphones which themselves account for an important part of the radio audience. It’s easy to understand why broadcasters are so appetized by the potential convergence: “away from home” audiences have geographical flexibility and are reached in a variety of mindsets including at the point of purchase or visit. OOH also enjoys low levels of the “advertising avoidance” that, arguably, has helped to drive younger audiences from traditional media. Advertisers increasingly see digital OOH as a way to connect the dots between what costumers are doing online and on the street. That’s why Ashley Tabor has paid such a high price to be a major player. The £300m that Global reportedly paid for Primesight and Outdoor Plus was some 30x operating profit and almost 3x revenue. And, now, the £450m paid for Exterion is 20x EBITDA. But, unlike Global’s 26% profit margins, these OOH companies struggle to reach double digits, none more so than Exterion which last year doubled its margin to all of 6%. That’s only the start of the worries, because so much of Exterion’s revenue comes from assets that are leased not owned. A single deal with Transport for London may account for 40% of all revenues and it’s only got six years to go before the next auction. It prompts the simple question of whether OOH digital services, in becoming a broadcast medium, might yet lead Amazon, Google, Facebook and Netflix to start bidding for these contracts. Is it just possible that by, diversifying into OOH, Global is effectively inviting into its (so far) undisrupted world, the very digital companies that have monstered every other category of media? Another big gamble.
Consumer digital. News Corp subsidiary Move Inc., operator of realtor. com, has completed its acquisition of Opcity, the US real estate technology platform that matches home buyers and sellers. Opcity has grown its US client base to over 5,000 brokerages and more than 40,000 agents since 2015. Move Inc – with News Corp’s matching REA business in Australia – has consistently been among the best-performing subsidiaries of News Corp, accounting for some 35% of profit but only 10% of revenue. The Murdoch-family controlled parent company has long been best-known for its daily newspapers in the US, UK and Australia, and Harper Collins book publishing. But it has been quietly transforming its operations in Australia where it also controls Foxtel pay TV and, in the UK, where The Sun online has overtaken DMGT’s Mail Online to become the country’s largest newspaper site. Foxtel, whose subscriptions revenue has been falling in the face of competition not least from Netflix, is launching a much-vaunted sports streaming service in March. In the UK and Ireland, News Corp’s Wireless Group operates 30 leading radio brands including talkSport (claimed to be the world’s biggest sports radio station), talkRadio and Virgin Radio. It is easy to believe that the digitally-refocused $8bn News Corp (now divorced from 21st Century Fox which was sold to Disney and Sky TV, acquired by Comcast) could launch further (free or subscription) streaming services, for example in business, travel and politics in various markets.
Magazines. Newsweek Media Group has spun off into two separate companies — the 85-year-old Newsweek magazine and IBT Media. Newsweek will comprise the US print and digital versions of the magazine, as well as the international editions in EMEA and Asia and the website Newsweek.com. IBT Media will consist of the International Business Times, Player.One, Latin Times, Fashion Times and Medical Daily. On the day of the demerger announcement, the New York Times reported the following: Newsweek magazine, the onetime media powerhouse, was at the center of a multimillion-dollar fraud and money-laundering conspiracy, according to an indictment by Manhattan prosecutors that was unsealed Wednesday (Oct.10). Two publishing companies, IBT Media, which owned the magazine, and Christian Media, a faith-based online publisher in Washington, were charged with trying to defraud lenders by pretending to borrow money for sophisticated computing services. Instead, most of the money was funneled back to accounts controlled by the two media companies and their principals — Etienne Uzac, a co-founder of IBT, and William Anderson, Christian Media’s former chief executive and publisher — and unnamed co-conspirators, the indictment said. It said some of the money had been used to cover the magazine’s operating expenses.The men were charged with misrepresenting Newsweek’s financial health and creating a fictitious accounting firm, Karen Smith L.L.P., along with a series of fake financial statements to dupe lenders into putting up millions of dollars in 2015 and 2016. Oikos Networks, a computer company, was also named in the indictment, charged with providing fewer, lower-quality computers than the expensive ones on invoices.
Broadcast-streaming. Blue Ant Media has acquired its fellow Toronto-based factual prodco Saloon Media. Saloon Media’s credits include Mummies Alive and Hunting Nazi Treasure for History (Canada), Smithsonian Channel (US) and Yesterday (UK). CEO Michael Kot, who was with Entertainment One before creating Saloon Media in 2013, says: Kot added: “Saloon’s ambition to reach a wider audience and connect with new global business partners dovetails perfectly withBlueAntMedia’s push to expand content production for world markets. We’re extremely excited to be part of BlueAnt’s growing North American team.” Transaction terms not disclosed.
Events. CloserStill Media, the London-based exhibition and conference organizer, has acquired a majority stake in Focuszone Media, Inc, operating as The eLearning Guild, for an undisclosed sum. The eLearning Guild has a 40,000+ membership community of learning and development professionals in the US and around the world. The Guild operates major conferences and exhibitions, including DevLearn (Las Vegas, Nevada), Learning Solutions (Orlando, Florida), and Realities360 (San Jose, California), conducts research, and has a number of digital publications and online events. The private equity-owned CloserStill has annual revenues of some £55m and said to have industry-best EBITDA margins of almost 50% and prodigious annual growth rates.
Events. Blackstone Group has agreed to buy the National Exhibition Centre Group (NEC), the UK’s largest exhibition venue operator, from LDC, the buyout arm of Lloyds Banking Group PLC. The deal values NEC Group at around £800m. LDC had bought the company from Birmingham City Council for £307m in 2015. Founded in 1976, the NEC owns and operates Birmingham’s National Exhibition Centre, the International Convention Centre and Arena Birmingham. The group also owns the Genting Arena in Birmingham, a ticketing agency and a catering business, and has a contract to run the disused Bradford Odeon, which is reopening as a 4,000-capacity live events venue in 2020. The NEC reported EBITDA profit of £54.7m in 2017 – up nearly 10%. Blackstone expects to triple NEC’s EBITDA from £70m to £200m during the next five years through acquisitions and organic growth of about 5% per year. Birmingham, the UK’s second largest city, hosts the Commonwealth Games in 2022, with four NEC properties the venues for sports such as judo and gymnastics. The deal follows Blackstone’s purchase of Clarion, the UK-US exhibition organiser, for £600m last year. Since then, Clarion has reportedly tripled in size through acquisitions in the US and Asia. It is rumoured to have approached RELX about the possible divestment of Reed Exhibitions, which had been the world’s longtime leading exhibition organiser until Informa’s acquisition of UBM in 2018.
Events. The US quoted exhibition organiser Emerald Expositions Events has acquired Boutique Design New York (BDNY) and related assets from ST Media Group International and Hospitality Media Group. Now in its ninth year, BDNY is a trade show and conference for boutique hospitality design professionals, primarily serving the eastern United States, Canada and Europe. In addition to BDNY, Emerald is acquiring the BDwest and HX: The Hotel Experience trade shows, the Hospitality Match, Senior Lifestyle Design Match and Forum Series events, and Boutique Design, the partner magazine to BDNY. Transaction terms not disclosed. The $440m-revenue Emerald Expositions (incorporating events once owned by Miller Freeman, Nielsen, VNU and GLM) is the leading US-owned operator of B2B trade shows, operating more than 55 trade shows principally across retail, technology and construction.
B2B information. The $800m-revenue CoStar Group, a US-based global provider of commercial real estate information, analytics and online marketplace,s has acquired Realla, which bis claimed to be the UK’s largest public portal in commercial property. Launched in 2016 by founders Andy Miles and Ian Parry, Realla is a free-to-list search engine for commercial property. It displays the largest public index of available commercial real estate in the UK. Realla also offers a software product, called Realbase, which provides a dedicated, all-in-one commercial property marketing & data management platform for agents and landlords. Realla claims over 100 corporate customers across the commercial real estate sector. Transaction terms not disclosed.
B2B information. WebMD Health Corp, an Internet Brands company has acquired prIME Oncology, a provider of independent medical education in oncology. The acquisition expands the global footprint of the business, adding an office in The Hague to those in New York, Paris, and London. Medscape Oncology reaches more than 100,000 active hematology and oncology members worldwide and delivers education to professionals in 191 countries. Transaction terms not disclosed.
Events. US-based Access Intelligence has acquired P3C Media, owner of The Public-Private Partnership (P3) Conference and Expo, the leading education and networking event for P3C leaders from government and industry to discuss infrastructure challenges and innovations in project delivery, procurement, life cycle asset management and solutions. Terms of the deal were not disclosed. Access Intelligence is a privately-owned B2B media and information company headquartered in Maryland, serving the marketing, media, PR, cable, healthcare management, defence, chemical engineering, satellite and aviation markets. Leading brands include PR News, Ad Exchanger, AdMonsters, Cynopsis, Cablefax, Folio:, Event Marketer, LeadsCon, Chief Marketer, Defense Daily Network, AviationToday, Studio Daily; Power, and Via Satellite. Market-leading conferences and trade shows including LeadsCon, AdMonsters OPS and Publisher Summits, The Folio: Show and Experiential Marketing Summit.
Magazines. UniLad has been bought by its rival LADBible after tax debts of £1.5m forced it into administration. The two British online companies are the biggest publishers on Facebook, thanks to their viral videos and keen understanding of how to game the social network’s algorithm. But despite their global scale, the companies’ combined annual revenue is about £25m. LADbible had revenue of £15.3m and pre-tax profit of £3.7m in 2017. The profit was almost double that of 2016. Founded in 2012, LADbible Group said it was “redefining entertainment and breaking news for a social generation. Using all major platforms, we’ve rapidly risen to become one of the web’s most prominent social video publishers.” LADbible said the acquisition of UniLad “makes us the largest social video publisher ever” with more than 120m followers. “In August alone, our combined videos were viewed 4.5bn times. We believe that the UniLad Group brands complement our existing offering and we can promise our audience more of the stuff they love from all the brands in the new LADbible Group family.”
Mike Danson is the maddening Brit who, in 2007, sold Datamonitor to Informa for £502m only to buy it back eight years later for just £25m. Now, he’s busy building another billion dollar research and data business, GlobaData Plc. But, meanwhile, he has just splashed $31.5m on a 12,000 sq ft, six-storey home in Manhattan’s Upper Eastside, which was formerly owned by Michael Jackson. Nobody announced the purchase but, then, even Danson’s quoted company has been known to forget to tell investors about the odd £20m acquisition (Infinata in 2017). Lots of things are unusual about Danson’s 68%-owned, quoted company including the succession of acquisitions and disposals (at least six during the past two years) passing between his private and public companies. The largest ‘related party’ deal was this year’s acquisition of Research Views for £100m – priced at almost 45 x EBITDA and 4 x revenue. If you thought the Informa deals were doozies, Mike Danson negotiates even better with himself. Then, there’s the fact that GlobalData Plc pays Danson’s own company for its offices as well as for accounting, HR, IT, and facilities management. Apart from the odd loan between the private and public companies, all these “corporate services” are a £3m annual bill for GlobalData whose minority investors might just worry about a certain lack of independence. But this is the messy backstage of a company that is growing impressively. In 2017, revenue from its services across the retail, ICT and healthcare markets increased by 22% to £121.7m. Organic growth accounted for more than half of the increase. In the first six months of 2018, the company did even better, increasing EBITDA by 31% to £14.6m on revenues that were up 32%. Subscriptions have been growing fast and the company is targeting 25% profit margins. The leading brands include: Canadean, Kable, Verdict, Current Analysis, PharmSource, and MarketLine. GlobalData claims to offer 4,000 corporate customers “a single user-friendly interface, an end-to-end view of your entire industry value chain: from suppliers, manufacturers, channels to end-users (being consumers, patients, customers), all in one place and easily shared with colleagues.” Nobody knows better than Danson how to build “premium data and analytics” and, perhaps, nobody is better at charging “real” subscription prices. Even insiders who are quick to identify his workaday absence of “emotional empathy” admire his analytical skills and deal-making. He doesn’t give interviews and doesn’t much care what people say. But behind the harsh epithets is the man who quietly built Datamonitor in his north-west London apartment and financed it from thousands of pounds run up on multiple credit cards. Danson personally made almost £200m from the sale of Datamonitor, right at the top of the market. In the intervening years, he has donated some £10m to bursaries for under-privileged students in his old college at Oxford University and other educational causes in Africa, Asia and the UK. He has been a benevolent supporter too of needy UK magazines like Press Gazette and the politically-left New Statesman. And he likes his Premier League football (Manchester United and Chelsea). That’s the softer side of the man whose latest company is worth £650m but frustrates and excites investors in equal measure. GlobalData’s annual report discloses that revenues are nicely spread with 40% from each of the US and Europe, and the rest from the AsiaPacific. But it is difficult to find the usual investor information on the web site, and who can tell which of the multiple companies operating from his London headquarters belong to the public group and which to the private one? Our guess is that the indulgent confusion will continue for some time yet, and that more deals are in the pipeline. But any indications of new corporate transparency – and some media interviews – may become the signs that Mike Danson is ready to sell again. Let’s wait for 2019.
News. Johnston Press (JP), the heavily indebted UK news group behind the i, The Scotsman, The Yorkshire Post and around 200 other titles, has (finally) put itself up for sale. The group’s collapse perfectly illustrates the decline of the regional newspaper market in the past decade. In 2006, the company had 8,823 employees and a salaries bill of £206m; last year there were just 2,141 employees costing some £85m. Between those two dates, recruitment classifieds plunged from £246m to just £80m. But there were other problems. For 200 years, JP it was a small, family-owned printer publisher based in Falkirk, Scotland. Almost 50 years ago, Freddie Johnston, the founder’s great-great-great grandson started making ever more ambitious acquisitions. The company IPOd in 1988 and proceeded to load up with deals and debt, notably under former engineer Tim Bowdler who was CEO during 2001-9. The engaging Bowdler’s media career started as a steady move through the gears: a cautious start, solid 30%+ profit margins, a buying spree, £1m pay cheques – and, then, crash! The company has been in a spin ever since but has been struggling even more urgently with its finances since March 2017, when it first started negotiations to refinance a £220m bond due for repayment on June 1 next year. It recently kicked off a strategic review of its options. But newish CEO David King (ex Time Out and BBC Worldwide) has had to admit that the company would struggle, to say the least, to refinance that 2019 debt payment. Johnston Press is still profitable and actually reported an increase in operating profits of £7.4m at its most recent interim results. But it is highly indebted and also has a pension scheme deficit of £40m, leaving the market value of the company at just £3m (compared with £1bn a decade ago). The more curious losers include JP’s second largest (11%) shareholder, Malaysian communications billionaire Ananda Krishnan who invested his £120m profit from the 2008 sale of London’s Excel exhibition venue, on the fateful advice of a UK media executive. The stake quickly lost most of its value. Buyers of the newspaper group could include Reach Plc (the former Trinity Mirror which recently acquired the Express and Star daily news brands from Richard Desmond) and the Gannett-owned Newsquest – if they are not put off by the debt and the presumed need for substantial redundancy payments. But insiders are wondering whether Rothschild, which is handling the process, will succeed in flushing out philanthropic or not-for-profit owners for what are still some of the UK’s best-known newspapers. For all reasons, a single transaction will be the objective of the JP investors-lenders but there will be a much longer line of prospective buyers for individual brands like The Scotsman, Belfast News, Sheffield Star, and Yorkshire Post. The relatively buoyant national newspaper i (formerly owned by The Independent) is most likely to be sold separately anyway, perhaps to Reach or even to The Guardian or News Corp. It may well take a reluctant break-up decision to prompt a flurry of not-for-profit bids for individual regional brands. It’s going to be rough.
B2B information. Advance Publications, Inc. has acquired a majority stake in Newzoo. Transaction terms not disclosed but as part of the agreement, Advance will make a significant capital investment to accelerate Newzoo’s growth as the global leader in games and esports analytics. Amsterdam-based Newzoo is a market intelligence and analytics firm with a primary focus on games, esports, and mobile. Its core business provides direct access to both global and country-level data that informs strategic and daily decision making. Advance is the Newhouse family-owned media group, founded in 1922, whose global interests include Reddit, and Condé Nast brands such as Wired, Ars Technica, and GQ, and 1010data, a cloud-based analytical intelligence and consumer insights business. Advance recently embarked on a multi-billion dollar capital redeployment initiative to accelerate diversification from a traditional dependence on print newspapers and magazines. In August, it acquired another Amsterdam-based business, Stage Entertainment, a production company focusing on musical theater in Europe.
Events. the UK-based EHI Live has been acquired by CloserStill and will be integrated into the organiser’s healthcare portfolio as part of the Digital Healthcare Show, which itself is part of the Health+Care series which will run at ExCeL London on 26-27 June 2019. Transaction terms not disclosed. CloserStill is the fast-growing, much-awarded exhibitions business, focused on technology and healthcare. It operates almost 40 exhibitions in the UK, USA, France, Germany, Singapore and Hong Kong and including The Vet Show, The Pharmacy Show, The Dentistry Show, CloudExpo, DataCentre World, and Learning Technologies. It has annual revenues of some £55m and said to have industry-best EBITDA margins of almost 50% and prodigious annual growth rates. The company was created by tradeshow veteran Phil Soar, former CEO of the former Blenheim Exhibitions which soared in the 1990s before being acquired by UBM. CloserStill, (now part-owned by Inflexion private equity) is 10 years old and is doing plenty of bolt-on acquisitions. It’s looking ready for a really big deal – as buyer or seller.
B2B Information. Buyout funds Blackstone and Hellman & Friedman — alongside co-investors CPPIB from Canada and GIC from Singapore — are rumoured to be exploring the possibility of a bid for Nielsen, which has recently hired bankers in New York to explore strategic options. Neilsen has an enterprise value of around $17bn.
B2B Information. Dentsu Aegis Network has acquired B2B International, the UK-based specialist business-to-business (B2B) market research company. B2B International will become part of Gyro, the full-service global B2B agency it purchased in 2016. Financial details were not disclosed.
Social Intelligence. Brandwatch and Crimson Hexagon are merging to create a $100m-revenue business. Brandwatch, of Brighton in the UK, claims to be the world’s leading social intelligence company whose teams build software solutions for hundreds of businesses including Unilever, Whirlpool, British Airways, Walmart and Dell. The Boston, US-based Crimson Hexagon “helps global brands better understand their consumers”. Its AI-powered platform allows clients (including Anheuser-Busch, Adidqas and Twitter) to analyze audiences, track brand perception and campaign performance, and detect competitive and market trends. The merged business will be known as Brandwatch.
B2B information. Minneapolis-based DTN has agreed to acquire Weather Decision Technologies to enhance its weather technology platform. Terms of the transaction not disclosed. DTN claims to be “the independent, trusted source of actionable insights for 2m customers focused on feeding, fuelling and protecting the world.” DTN focuses on the agriculture, oil and gas, trading, and weather-sensitive industries.
News. Punters Paradise Pty Limited, a subsidiary of News Corp Australia, has agreed to acquire Racing Internet Services Pty Ltd (Racenet). Racenet provides horse racing news, form guides, tips, statistics and tools to punters. Transaction terms not disclosed.
B2B information. Skift Inc, the five-year-old global travel industry platform, has acquired Airline Weekly, of Florida, for a modest price that is believed to be principally geared to future profits and shares. Airline Weekly (AW) was founded in 2004 and publishes a subscription weekly ‘magazine’ emailed as a PDF. Curiously, it even looks like a print newspaper. But it’s a high-rated news and information source especially among US airlines, and is said to have some 7k subscribers paying $775 per year. Less than 10% of revenue comes from ads, and the staff exclusively comprises the three founders. AW is thought to be marginally profitable. Its tagline -“Shouldn’t a publication about an interesting industry be, well, interesting?” – sounds like something right out of the mouth of Skift founder Rafat Ali whose three-month negotiation with Airline Weekly’s founders was betrayed by tell-tale AW quotes on Skift. The opportunistic deal spotlights the rising success of Skift, now said to be profitable with revenues of some $8-12m (primarily from events, research reports, and sponsored content). The company has almost 60 employees, mostly in New York. It is 10 years since Ali sold his PaidContent media-tech web platform to The Guardian for some $12m. It had some 200k page views but they neatly included the daily newspaper’s senior executives who were momentarily joyous about their first acquisition outside the UK. Ali was pretty pleased too and managed to fill reporters’ notebooks with the rags-to-riches story that he had created his super-blog about the business of ‘new media’ in 2002 as a kind of job résume: “I was trying to get hired. I was trying to show employers the kind of journalism I could do. I never thought it would be a business” (even though he had private equity funding). But The Guardian deal, whose price would have more than doubled if only growth targets had been met, quickly went sour and ended, two years later, with PaidContent being swallowed up by GigaOM for next to nothing. Rafat Ali quit with regrets of being sweet-talked by the loss-making UK newspaper. In 2012, he bounced back with the launch of Skift, described at the time as “an online trade publication that writes about the travel business, and primarily for the travel business, with occasional stories that go viral with a much larger audience”. That’s only part of the story for a new kind of publisher in a B2B media world that has flipped from being dominated everywhere by large publishers with multi-sector portfolios to versatile global specialists who deep-dive into everything from high-value information to consulting, and research to events. Rafat Ali is a student of media, and Skift seems like nothing so much as a colourful cocktail of ingredients from four highly-personalised, community-building media successes by new-wave entrepreneurs in the US and UK: Monocle, The Information, The Business of Fashion, and The Wrap. But what happens next is the exciting bit. Ali’s painful lessons from his little skirmish with The Guardian and his polished story about “not wanting” to add to the $2.5m he had raised from venture capital in Skift’s early days, can’t really be taken at face value. He may continue to snap up pockets of expertise in travel and also hospitality, into which he has been expanding. And we bet he will be doing more of his stylish print magazines. But the question is who will reward Rafat Ali for creating one of the world’s sexiest B2B media brands? And when?
Exhibitions. ITE is buying the world-leading Mining Indaba conference and exhibition for £30.1m – half the price Euromoney paid for it in 2014. The 23-year-old event, which takes place annually in Cape Town, this year made EBITDA profit of £3.7m on sales of £7.2m. The sale represents another strategic shift for Euromoney which had acquired Indaba for $78m (£60m). It had seemed to fit with the company’s (former Metal Bulletin) metals and mining portfolio. So, does this cut-price divestment signal that yet more is to follow in CEO Andrew Rashbass’s strategic clear-up? The 8x EBITDA price for a well-established, high-margin exhibition and the fact that the Indaba sale is only partly being settled in upfront cash suggests Euromoney is, let’s say, an enthusiastic seller. ITE will make an initial payment of £20m, with the remaining £10.1m being paid in June 2019. But what looks like a very good deal for ITE did not quite make it a good week. In a reminder of the changes being wrought by the company, which once depended on the Russian market, ITE warned that the fall in the Russian rouble and also in the Brazilian and Turkish currencies would hurt 2019 results. But investors are expecting great things from the 27-year-old exhibition company’s transformation, including the £300m acquisition of the International Spring Fair and other retail shows from Ascential. With almost £80m of revenue in 2017, it is believed that these events could triple ITE’s revenue to at least £230m with profit margins of more than 25%. Revenues from Russia are forecast to fall to some 25% of the ITE total, compared with more than double that just a few years ago. The UK will now be bigger than Russia for ITE. If the company achieves its targeted £5m of cost savings on the seven acquired exhibitions, CEO Mark Shashoua (who once managed the International Spring Fair et al for Ascential) will have delivered real stability to a company once so sensitive to the volatility of Russia and other developing economies.For the most recent year (up to September 2018), ITE is expecting to report like-for-like profits up 10%. But that’s just the start in ITE’s race to be a diner not the dinner in the growing consolidation of global exhibitions.
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